Inheritance tax receipts continue to rise in latest HMRC figures

The latest figures published by HMRC show that Inheritance Tax (IHT) receipts continue to generate significant revenue for the Treasury, maintaining the upward trend seen in recent years. In the most recent reporting period, IHT receipts reached a notably higher level than the same period in the previous tax year, reinforcing the steady increase in tax collected from estates. 

This sustained growth reflects a broader pattern, with IHT consistently delivering record or near-record receipts. The data highlights how the tax is affecting a growing number of families across the UK, rather than being limited to only the highest value estates. As a result, IHT is becoming an increasingly important consideration in estate and succession planning. 

Why are inheritance tax receipts increasing?

Several key factors are contributing to the continued rise in IHT receipts. One of the most significant is the long-standing freeze on the nil-rate band and residence nil-rate band thresholds. As asset values increase, particularly residential property, more estates are being drawn into the scope of IHT through fiscal drag. 

In addition, strong growth in property prices across many parts of the UK has pushed estate values above available thresholds. Investment portfolios have also benefited from market performance over time, further increasing the overall value of estates. 

There is also evidence that HMRC’s compliance activity has become more effective, ensuring that liabilities are more consistently identified and collected. Taken together, these factors explain why IHT receipts continue to rise and why more individuals and families may now need to consider their exposure to the tax.

What does this mean for individuals and families?

The continued rise in Inheritance Tax receipts indicates that more estates are being brought within scope, often unintentionally. Families who may not have previously considered themselves exposed to IHT may now find that increasing property values and accumulated wealth place them above the available thresholds. 

This shift underlines the importance of regular estate planning reviews. Individuals should consider the structure of their assets, the availability of reliefs and exemptions, and the potential benefits of lifetime gifting. Without careful planning, a larger proportion of an estate may be lost to tax than anticipated, affecting the value ultimately passed on to beneficiaries.

Looking ahead: further changes on the horizon

While the current figures already demonstrate a sustained increase in IHT receipts, further changes are expected which may broaden the scope of the tax. These figures also come ahead of anticipated changes in 2027, when pensions will come into the scope of Inheritance Tax. 

Get a more detailed analysis of how the proposed 2027 changes could affect pensions and estate planning strategies written by Partner Anna Sibbald and Jeremy Crouch. 

This potential development could significantly alter how individuals approach retirement and estate planning, particularly where pensions have traditionally been used as a tax-efficient vehicle for passing on wealth. In particular, individuals who have relied on pensions as part of their estate planning strategy may need to reassess how these assets are treated going forward. 

Conclusion

The latest HMRC data reinforces a clear trend of rising Inheritance Tax receipts, driven by a combination of frozen thresholds, increasing asset values and improved compliance. With further changes on the horizon, it is increasingly important for individuals to take a joined-up approach to estate and retirement planning.