Inheritance Tax receipts for April 2024 to February 2025 are £7.6 billion, which is £0.8 billion higher than the same period last year, HM Revenue & Customs revealed.
Will Hale, CEO of Key Advice said that the Government expects the records to keep on “being broken” with the Office for Budget Responsibility forecasting total receipts of £9.7 billion for the 2028/29 tax year. He continued:
“The rise in IHT receipts reflects partly the ongoing freeze on thresholds with last year’s Budget extending it to 2030. The record-breaking receipts also reflect increased wealth and highlight the increased complexity of planning for IHT and retirement.
There is a clear need for a fundamental reassessment of the role of property wealth in financial planning with many older clients owning considerable capital tied up in their homes which should be put to work funding their retirement and, where appropriate, helping children and grandchildren on to or step-up the property ladder with gifting.
Modern lifetime mortgage products can help with tax efficient intergenerational wealth transfer, subject, of course, to high-quality financial advice. As importantly, the money being paid out in IHT could arguably be better put work helping boost the UK economy and support the Government’s growth agenda.”
Ian Dyall, Head of Estate Planning at wealth management firm Evelyn Partners said that property and investment assets continue to grow in money terms so that more modest estates in real terms are exceeding the frozen nil-rate bands, and those nil-rate bands start to look less meaningful for larger estates, protecting an ever-smaller proportion of them against IHT. He added:
“Further moves on taxation at next Wednesday’s Spring Statement are unlikely, not least because most of the tax measures announced at the autumn Budget have yet to take effect or be confirmed in law. Those eyeing the event nervously from an IHT point of view can probably relax – and even hasty decisions around drawing on pensions, being made after the Budget announcement that they will be included from April 2027 in IHT liabilities, are probably worth reviewing, preferably with professional help.
If the Chancellor is really backed into a fiscal corner, a slim possibility is that she will again extend the freeze on personal tax bands and thresholds from April 2028 – but the IHT NRBs are already frozen until April 2030 after the Budget, so even change there is unlikely.
However, it would not be surprising if the Chancellor announces a tax review or consultation or two, and the IHT gifting regime is one area where the cash-strapped Labour government could look to bring in more revenue. While such a process would be billed as a “simplification” of the gifting rules – which are admittedly confusing – the aim would be to block off some of the escape routes that estates look to when trying to mitigate a future IHT bill.”
Shaun Moore, tax and financial planning expert at Quilter commented:
“The steady rise in IHT receipts has become an inescapable feature of the tax system. With the nil-rate band (£325,000) and residence nil-rate band (£175,000) frozen until 2030, the government has ensured that more estates are pulled into paying this deeply unpopular tax. Rising property prices, particularly in the South East, are compounding the issue, leaving many families unexpectedly liable for a 40% tax charge on inherited wealth.
Further policy changes will only exacerbate the issues. Restrictions on Agricultural Property Relief and Business Relief from April 2026 could place additional strain on family-owned farms and businesses, while from April 2027, unused pensions will also fall within the scope of IHT. What was once a tax on the wealthiest estates is increasingly burdening middle-income families with no obvious route for mitigation.
Despite repeated calls for reform, the government continues to rely on IHT as a growing source of revenue. Without intervention, the number of families caught in the IHT trap will continue to rise, forcing many to rethink their estate planning strategies. Capital Gains Tax (CGT) receipts for February hit £1.3 billion, bringing the total for the 12 months to February 2025 to £13 bn—slightly lower than last year’s figure of £14.5 bn.”
Tim Snaith, Partner at Winckworth Sherwood said that IHT revenues continue to steadily rise due to the prolonged freeze on IHT thresholds. He said:
“The nil-rate band (NRB) and the residence nil-rate band (RNRB) have not been adjusted for inflation or rising property values, which means more estates are becoming liable for the tax as asset values increase. It remains a persistent and unavoidable inheritance tax planning issue, and one that should not be ignored. To avoid unexpected financial burdens, it is crucial for individuals to regularly review their wills and estate planning, with professional legal advice, to manage their wealth efficiently.”
Andrea Jones, head of Irwin Mitchell Private Client Advisory said the latest Inheritance Tax (IHT) receipt figures offer a “glimmer of spring sunshine” for the Treasury ahead of what could be a chilly reception for next week’s statement in Parliament. She said:
“With IHT receipts reaching record highs, this trend signals more significant changes on the horizon. If current policies remain unchanged, we could see the number of estates liable for IHT potentially more than double over the next few years. This underscores the importance of understanding the current IHT landscape and preparing for its future impact.
The clock is ticking with roughly a year to go until the new IHT rules come into force. Now is the time to consider gifting, structuring estates, and the use of trusts to optimize estate planning.”
Richard Bate, head of private wealth at national law firm Weightmans, said frozen inheritance tax (IHT) thresholds mean that more families are being “drawn into the IHT net, often without realising it”.
“To limit exposure, early action is key. Despite speculation about changes to the rules about gifts giving away assets early can help reduce future liabilities and could take the form of regular gifts out of income, gifts up to annual allowances or larger transfers that fall under the current seven-year rule. For those with wealth tied up in property or investments, more structured approaches may be beneficial. Setting up trusts, or even family investment companies, can provide greater flexibility and asset protection.
The reality is that IHT is affecting more estates than ever before. Without careful planning, families may be forced to sell key assets, at an inopportune time just to cover tax demands. Taking proactive steps now can help safeguard wealth for future generations.”
