A further rise in Inheritance Tax (IHT) receipts, coupled with a growing equity release market is evidence of the need for a ‘joined-up’ approach to advice for clients as there is ‘awareness among homeowners of the need to plan ahead’ with many choosing to unlock property wealth during their lifetime to support younger generations or reduce the taxable value of their estate.
Inheritance Tax receipts for April 2025 to October 2025 are £5.2 bn, a £0.2 billion increase on the same time last year; and follows an increase of £0.1bn in the period from April 2025 to September 2025 compared to the same six months the year before.
At the same time a 4% increase year-on-year in equity release lending according to the Equity Release Council’s latest quarterly report suggests a growing number of homeowners are using property wealth to fund later life.
Richard Bate, head of private wealth at Weightmans, said:
“The latest inheritance tax receipts continue to show an upward trend. A reminder that more estates are being drawn into the IHT net every year. What was once considered a tax on the very wealthy is now affecting a far broader range of families, particularly those with property wealth.
“The combination of rising receipts and increased equity release activity points to a more financially engaged public, but it also highlights the need for joined-up advice. Equity release can be a powerful tool, but it should never be a knee-jerk response to tax headlines. The best results come from early, well-structured planning that considers the full financial and personal picture.”
Ian Dyall, Head of Estate Planning at wealth management firm Evelyn Partners, added the rise in IHT was ‘predictable’ and with speculation the upcoming budget could target gifting suggested now might be the right time to ‘set the seven-year clock ticking’ in lieu of potential changes on 26th November.
“IHT reliefs have not featured prominently in the months of speculation around possible tax-raising measures anticipated in the Autumn Budget” said Dyall.
“After all, IHT reforms announced at the last Budget, including bringing unspent pension pots into the scope of IHT from April 2027 and slashing agricultural and business property reliefs from next April, have yet to take effect.
“The UK’s rather complex gifting regime did appear in early Budget speculation but whether or not the Chancellor decides to review it, families should do their own review – at least those building up significant IHT liabilities. For those who can afford it, what better time of year to make a present of some money or assets to loved ones or younger relatives.
“The forthcoming inclusion of unspent pension assets in estate has caused many big savers to start withdrawing pension cash and either spending it, giving it away or finding alternative tax-efficient homes for it. This is especially the case with older people who fear – if they die after age 75 – that their beneficiaries might also pay income tax as they withdraw funds from the pension that might already have been taxed at death.”
Rachael Griffin, tax and financial planning expert at Quilter, concurred with Dyall. While the contents of the budget remains speculative, “making use of the £3,000 annual gift allowance remains a simple and effective way to reduce the value of an estate on death” she said.
The general consensus amongst professionals is IHT is no longer the preserve of the wealthy. Samantha Warner, Legal Director at Winckworth Sherwood, said:
“IHT revenues continue to steadily rise due to the prolonged freeze on IHT thresholds. 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.”
Griffin shared a similar sentiment adding more people who may not feel hugely wealthy will ‘get snagged’ by the tax after a decade of frozen thresholds and rising house prices; a trend only predicted to accelerate with the inclusions of pensions from 2027.
IHT receipts could hit a record-breaking £9bn+ in 2025/26 said Will Hale, CEO of Key Advice & Air, but any hope the Treasury might leave IHT alone after changes to Agricultural and Business Property Relief (APR and BPR), and bringing pensions into the net might be wishful thinking:
“With any increase to income tax apparently being ruled out, customers must prepare themselves for a further raid on monies looking to be passed to others. Whether changes are to be made to the seven-year rule or we see the introduction of a lifetime cap on gifting, or something completely different, is difficult to predict – as is when any amendments are likely to be phased in.
“Therefore, it is imperative that customers seek expert advice. And, with over £3.7 trillion in property equity in the hands of the over 55s, it is crucial that this advice considers how products such as modern lifetime mortgages can form part of efficient intergenerational wealth planning.”
