Lower IHT receipts ‘turns spotlight on need for holistic advice’

A £37 million shortfall in inheritance tax (IHT) receipts marks another month of lower receipts compared to last year’s record total.

Rising demand for IHT and estate planning support is “turning the spotlight on the need for holistic advice”, according to Key Equity Release CEO Will Hale, which looks at all options to support objectives around tax-efficient retirement funding and intergenerational wealth transfer.

The IHT receipts for April 2026 to May 2026 are £1.4 billion but remain on course to hit £14.5 billion by the 2030/31 tax year, compared with £8.5 billion in the last tax year, according to the Office for Budget Responsibility.

“Despite a small dip in receipts from April 2026 to May 2026 compared to the same period last year never has quality advice been more important,” Hale stressed. “Advisers looking to achieve good outcomes for clients should be taking into account all assets and liabilities that sit on the family balance sheet.”

Property wealth will have a part to play in future planning strategies, he added, and is an area of focus for the Financial Conduct Authority’s consultation on lifetime and retirement interest only (RIO) mortgages.

Given recent government analysis of future pension incomes, which show 43% of people are under-saving for retirement, the FCA believes lifetime and retirement interest only (RIO) mortgages could play a greater role in enabling consumers to access equity in their property, with a lump sum payment or drawdown facility.

Hale explained: “With over £3.8 trillion of unencumbered housing equity sitting with the over 65s, property wealth must play a major role in all planning strategies. Advisers who are not qualified in or do not want to advise on later life lending can set up referral partnerships with trusted specialists to ensure clients have access to products such as modern lifetime mortgages which can be used to facilitate gifts to family members, supplement retirement income or to fund capital purchases.”

Shaun Moore, tax and financial planning specialist at Quilter, added: “While monthly figures can fluctuate, the broader direction remains clear, with more estates being drawn into scope as thresholds remain frozen and asset values persist.

“Following Andy Burnham’s just announced victory in the Makerfield by-election, the wider debate around wealth taxation is likely to move further into focus. Burnham has previously argued for scrapping inheritance tax in its current form and replacing it with a broader levy on wealth or estates, often linked to funding social care.

“However, he has also indicated that any near-term policy would remain within Labour’s existing manifesto commitments and fiscal framework. That suggests more radical reform remains a longer-term prospect, likely tied to a future general election rather than imminent change.

“In the meantime, the direction of travel is already established. Frozen thresholds and the inclusion of pensions from 2027 point towards steadily rising liabilities, placing greater emphasis on early and proactive estate planning.

“We are also now firmly in the final year where pension wealth remains outside the scope of inheritance tax, with unused pension pots due to be brought within the taxable estate from April 2027. That will significantly increase the number of families facing a liability.”