There is “no surprise” in the continued increase in inheritance tax receipts for those working in private client law, as the latest figures from HMRC show IHT receipts for April 2025 to February 2026 were £7.7 billion – £0.1 billion higher than the same period last year.
Any subtlety to what was once regarded as a stealth tax is now gone, according to Quilter’s Shaun Moore, as IHT receipts for the 2025/26 tax year already surpass the 2023/24 total of just under £7.5 billion with a month still to go. The 2024/25 total was £8.25bn.
“The surge reflects rising house prices and broader asset inflation, which are pushing more estates above the frozen £325,000 threshold,” Moore said.
“April’s reforms to agricultural and business property reliefs will also begin to shift the system. The government initially intended to cap 100% relief at £1 million per individual, but after sustained pressure from farmers it lifted the threshold to £2.5 million each, or £5 million for couples, with only the excess qualifying for 50% relief. Even with that concession, the direction is tightening. And from April 2027, most unused pension wealth will fall within IHT, meaning liabilities will rise sharply for many families. IHT is certainly no longer a tax aimed only at the mega wealthy.”
For Ian Dyall, head of estate planning at Evelyn Partners, the figures come as no surprise, with the Treasury on track for another record year in 2025/26. The cost of inaction has never been higher, he said, adding:
“The expansion of IHT is not a result of sudden shifts in wealth, but rather years of fiscal drag. Nil rate bands have been frozen for many years while asset values, particularly property, have continued to inflate. Rising asset prices benefit the holders of investments and properties but the danger is that these households are sitting on an unexpectedly large, and rising, tax bill for their beneficiaries at death.
“From a planning perspective, more estates that would once have been considered comfortably below the IHT threshold are now creeping into taxable territory. Families often discover this only when dealing with bereavement and the administration of Wills, by which point opportunities for mitigation have significantly narrowed. As the UK approaches key legislative changes – notably the inclusion of unspent pension funds within IHT from 2027 – many more families risk being drawn into the IHT net, placing additional pressure on beneficiaries who may not consider themselves affluent.
“The growth of IHT revenues serve as a reminder that, as reflected in many of our clients, IHT is no longer a marginal concern affecting only the very wealthiest, as it used to be. Families with modest and commonplace levels of wealth can now benefit from some careful estate planning and IHT-mitigations strategies.”
Last week, influential think tank the Institute of Economic Affairs called for the abolition of IHT, describing it as “arbitrary, distortionary and expensive to administer.” In a recently published paper, the IEA acknowledged scrapping IHT was unlikely, instead offering a range of alternatives, including raising the nil rate band, cutting the headline rate of IHT, or changing gifting rules.
In the absence of reform, Will Hale, CEO of Key Equity Release, said the £3.7 trillion in property equity held by the over-55’s needs to be a bigger part of wealth drawdown and legacy planning advice. Commenting on the latest data, he said:
“Today’s HMRC data reinforces the role inheritance tax plays as one of the government’s most under the radar but dependable revenue raisers. An ever-tightening IHT backdrop is reshaping how advisers approach asset drawdown strategies, with the family home playing a growing role in retirement income and intergenerational wealth transfer planning .
“With pensions set to fall into IHT calculations next April, the old drawdown sequencing rules are being re-written and ‘which pot do we spend?’ has become one of the most consequential questions families will explore with advisers.
“Estate planning advice is far from straightforward and advisers recognise the need to be fully equipped with insight, tools and support to serve clients that must now look more holistically at their accumulated wealth drawdown options if good outcomes are to be achieved.
“Those over 55 hold £3.7 trillion in property equity and it’s crucial that the home forms part of wealth drawdown and legacy planning advice. Advice must include how products such as modern lifetime mortgages can form part of an efficient intergenerational wealth transfer and retirement funding strategy.”
