Inheritance Tax (IHT) has emerged as a growing concern in the UK, as the Treasury sees a consistent increase in tax receipts. The government has reported record-high IHT revenues, with projections showing this trend is likely to continue.
According to GB News, the recent surge in IHT collections has sparked significant attention, particularly regarding the upcoming reforms expected to widen the tax’s reach. This article explores the contributing factors behind the rise in IHT receipts, the potential impact of upcoming changes, and offers insights into the necessary steps families can take to manage their estates effectively.
Record-Breaking Inheritance Tax Revenues
The UK’s Treasury has seen an extraordinary rise in inheritance tax revenues, with IHT receipts reaching £3.06 billion during the first four months of the 2025/26 financial year. This marks a significant £200 million increase compared to the same period in 2024/25, when the Treasury collected £2.83 billion.
This eight percent year-on-year growth reflects the ongoing expansion of IHT collections, which follow a pattern of consecutive annual records. Last year, the total IHT receipts hit £8.2 billion, a figure that stands as an all-time high.
Looking ahead, the government forecasts that IHT receipts for the 2025/26 year will reach £9.1 billion by the end of the financial year. If current trends continue, the total for IHT could surpass £14 billion by the 2029/30 tax year, illustrating the rapidly growing reach of this levy.
Significant Reforms: Pensions and Agricultural Property
A key change announced in last year’s Autumn Budget will see pension pots and agricultural assets included in IHT calculations starting in April 2027. This reform represents a significant expansion of the tax net and is expected to have a major impact on estate planning, especially for wealthier households.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, comments,
“The decision to include pensions for inheritance tax purposes has garnered a lot of attention and has put the tax firmly on people’s radar.”
These reforms are likely to result in more estates being subject to inheritance tax, as pensions and agricultural assets were previously either exempt or treated differently for IHT purposes.
Additionally, the government has announced changes to business and agricultural property relief, which will begin phasing out in April 2026. These alterations to the system could further increase the tax burden for certain households, particularly those with significant farming or business assets.
How to Prepare: Financial Planning Is Key
With inheritance tax continuing to climb, it’s crucial for individuals to start planning early to avoid hefty bills for their heirs. Financial planners emphasize the importance of understanding how to reduce your exposure to IHT without jeopardising your own financial security.
Rebecca Williams, Divisional Lead of Financial Planning at Rathbones, advises that
“If you want to maximise the wealth you pass to the next generation, early financial planning is key.”
However, she also warns that it is
“Hugely important that someone does not gift away too much too early to loved ones and potentially leave themselves short in their haste to avoid this tax.”
For many families, simply inheriting a home that has appreciated in value over the years could trigger an IHT bill. Ms. Williams highlights that for ordinary families,
Simply inheriting a grandparent’s home – which they lived in all their lives and is now worth a tidy sum – can be enough to be on the hook for an IHT bill.
The rise in IHT is also contributing to a larger number of estates becoming liable for significant tax payments. By the end of the 2025/26 tax year, it is estimated that 3,524 estates will face IHT bills exceeding £500,000. This represents a sharp rise, with IHT liabilities becoming more common, especially in high-value areas like property and business assets.
