April – December 2025 saw Treasury net £6.6bn from estates
Inheritance tax (IHT) receipts for April 2025 to December 2025 reached £6.6bn, a rise of £200m compared to the same period last year, latest HM Revenue & Customs (HMRC) figures show.
The continued rise in tax take from IHT was deemed “unsurprising” by experts who predicted a surge from April 2027 when unused pension funds fall into the scope of the tax.
Aberdeen Adviser head of technical engagement Andrew Zanelli said receipts had been trending upward for some time.
He said: “We’re hearing from advisers, now that we have government’s draft legislation to bring pensions into the tax’s scope from April 2027, that they are getting significant numbers of new client enquiries on IHT planning.”
He added: “For so many clients that have not had to really consider IHT this has now become a stark reality. It is possible to manage IHT risk with good planning so it’s key to understand how much you’re worth.”
Evelyn Partners head of estate planning Ian Dyall said gradual increases in IHT take were driven by the fiscal drag effect of rising asset values taking more households’ estates above the frozen nil-rate bands.
However, he warned it would be “eclipsed in the coming few years by structural changes in IHT reliefs and rules”.
“For business owners looking at potential IHT liabilities and the long-term financial security of their firm and their family, a clear deadline for succession planning is fast approaching,” he said.
“A new cap on agricultural property and business reliefs will come into force on 6 April that means many business owners and their families face a greater IHT bill at death, which in some cases could spell jeopardy for the firm itself. A sudden and unexpectedly large IHT bill, particularly where liquid assets are in short supply, could spell the end for even a successful enterprise and the jobs it provides.
“Business owners and backers might be distracted by myriad pressures coming from tariff threats, business rates reform, National Insurance increases and minimum wage hikes – but they can still take steps now to mitigate some potentially damaging tax liabilities.”
Quilter tax and financial planning expert Shaun Moore agreed that fiscal drag was hitting more estates with IHT bills.
“What was once viewed as a tax affecting a relatively small minority is increasingly becoming part of mainstream financial planning, including for families who would not traditionally consider themselves wealthy,” he commented.
“That pressure is set to intensify further in the years ahead, particularly with pensions due to be brought into scope for inheritance tax from 2027.”
‘Powerful revenue generator’
Just Group analysis said the rate of increase in IHT collections was slowing compared to previous years but remained on track to surpass last year’s record haul and meet the Office for Budget Responsibility forecast from the Autumn Budget 2025 for receipts to reach £8.7bn in 2025/26.
It added that IHT receipts would continue to increase post-2027. It is expected the policy changes will see £14.5bn roll in from IHT in 2030/31 – an increase of 67% over a five-year period, according to the OBR’s estimates.
Just director David Cooper said: “IHT has been a powerful revenue generator for the Treasury following four consecutive years of record tax takes thanks to frozen thresholds and rising asset prices.
“While the tax is just about on track to clock up a fifth consecutive annual high and meet the OBR’s estimate, there are signs that the rate of increase has flattened this year. The Treasury will be banking on the policies announced at the Autumn Budget 2024 to provide fresh momentum to meet the 67% increase in revenue forecast over the next five years.
“In a changeable fiscal environment, anyone who is concerned that their estate may be subject to IHT should get an up-to-date valuation of their estate, including an assessment of their property wealth. A professional adviser can help people who want to manage their estate in an efficient way and ensure as much as possible can be passed on to loved ones.”
Jenna Brown – PA