Inheritance tax (IHT) receipts reached £5.8bn within the first eight months of the 2025/26 tax yr, in accordance with the newest information launched by HM Income & Customs (HMRC).
That determine is £84m larger than the corresponding interval final yr and continues a gentle upward pattern that has been in place for greater than twenty years.
Earlier this yr the Workplace for Price range Duty forecast that IHT would increase £9.1bn this present 2025/26 tax yr. The newest figures coupled with the adjustments introduced in final month’s Price range counsel that we’re properly on the way in which to satisfy these figures with 4 extra months to go.
Isaac Stell, funding supervisor at Wealth Membership, stated: “The Price range confirmed that inheritance tax is already one of many authorities’s most reliable income raisers. Firstly of this Parliament IHT introduced in £8.3bn a yr and by 2030/31 that determine is forecast to rise to £14.5bn – a unprecedented enhance pushed largely by frozen thresholds and a stealthy method to elevating revenues with out main bulletins that trigger a stir. This confirms that the inheritance tax guidelines in place are already doing their job as one of many Treasury’s quietest – and most dependable – income raisers.
“The Nil Price Band and Residence Nil Price Band – £325,000 and £175,000 respectively – have been already frozen till April 2030. The Price range prolonged that freeze by an additional yr, that means they are going to now stay unchanged till April 2031. Had these thresholds risen with inflation, far fewer estates can be paying any inheritance tax in any respect.
“The identical method has been utilized to reliefs. The brand new £1m allowance for 100% Enterprise Property Reduction and Agricultural Property Reduction, because of take impact from subsequent April (2026), can even be frozen till April 2031.
“Whereas this nonetheless represents a big restriction in comparison with the earlier system, there was a minimum of one welcome reversal. The federal government has confirmed that this £1m allowance will now be transferable between spouses and civil companions. That change removes the stress many households felt to ‘deplete’ the allowance on first loss of life and brings BPR and APR extra into line with different inheritance tax allowances.
“Pensions have additionally been caught within the inheritance tax web. From 6 April 2027, unspent pension pots can be introduced throughout the scope of inheritance tax, eradicating their long-standing function as a planning instrument.
“Taken collectively, these measures present a authorities that’s nonetheless squeezing extra income out of inheritance tax, however is operating out of delicate methods to do it. Freezes, restrictions and quiet extensions within the type of Fiscal Drag can solely go to this point. There’s solely a lot extra that may be raised by means of this manner. That actuality applies properly past IHT. In some unspecified time in the future, if the federal government needs extra money, it must be trustworthy with voters and lift taxes overtly and in doing so run the danger of dropping votes within the subsequent election.”
