Inheritance tax (IHT) receipts reached £5.2bn within the first seven months of the 2025/26 tax 12 months, £200m greater than the identical interval final 12 months, in accordance with new HMRC knowledge.
The figures proceed a long-term upward pattern and are available simply days earlier than the Autumn Price range, growing scrutiny of how frozen thresholds and rule modifications are bringing extra estates into the IHT web.
Nicholas Hyett, funding supervisor at Wealth Membership, stated: “The “hokey-cokey” Price range is simply days away, and up to date IHT historical past offers the blueprint we count on the chancellor to comply with.
IHT’s principal nil-rate threshold has been frozen at £325,000 since 2009 (had it elevated consistent with inflation it could now be practically £525,000). That, in accordance with Hyett, can squeeze an additional £80,000 from an property with out the federal government having to “elevate” taxes in any respect.
Hyatt believes the chancellor is ready to repeat the trick with varied different tax allowances – together with freezing earnings tax thresholds into subsequent decade.
He stated: “Focused IHT reliefs have come underneath assault lately – together with enterprise reduction, agricultural reduction and the choice funding market. All of those modifications are bought as closing loopholes and concentrating on the rich with out effecting “working folks”, by no means thoughts that they’ve been damaging for small companies, household farms and UK capital markets.
“We count on the chancellor to make a track and dance about concentrating on “particular pursuits” once more within the funds via wage sacrifice and a few type of “mansion tax” – although in follow tinkering across the edges like this has profound knock-on results, not least on exercise within the housing market.”
Lastly there’s pensions. Stripped of IHT reduction final time spherical and now dealing with nationwide insurance coverage on contributions if wage sacrifice is focused – pensions are the final word forbidden fruit for any chancellor.
Hyatt continued: “There could also be a remaining seize for extra IHT revenues this time spherical, via assaults on gifting guidelines. The present seven 12 months rule, after which presents are free from IHT, could possibly be prolonged or there could possibly be a transfer to cap presents out of surplus earnings (that are at the moment free from inheritance tax immediately).
“The truth although is that the federal government is near the underside of the barrel the place IHT is worried. And in that too IHT is foretelling the destiny of wider tax coverage. Subsequent 12 months the federal government goes to seek out it will possibly’t get any additional with tinkering and threshold freezes. If it needs to boost extra money it’s going to need to entrance as much as the voter and visibly elevate taxes – it’s only a disgrace there’s no loss of life obligation on political administrations, as a result of the Treasury can be in for a windfall.”
Rachael Griffin, tax and monetary planning professional at Quilter, stated the newest enhance in inheritance tax mirrored “a decade of frozen thresholds and rising home costs”, which has left “extra individuals who could not really feel vastly rich” uncovered to the tax.
Based on Griffin, receipts are “solely set to speed up as soon as pensions turn out to be liable to IHT from 2027”, arguing the change will “turbocharge future receipts and draw considerably extra households into scope”.
