Inheritance tax (IHT) receipts reached £5.8bn in the first eight months of the 2025/26 tax year, according to data released by HM Revenue & Customs (HMRC) this morning.
That figure is £84m higher than the same period last year and continues a steady upward trend that has been in place for more than two decades.
Earlier this year the Office for Budget Responsibility (OBR) forecast that IHT would raise £9.1bn this current 2025/26 tax year.
The figures announced today coupled with the changes announced in last month’s Budget suggest that we are well on the way to meet these figures with four more months to go.
Reaction:
Isaac Stell, investment manager at Wealth Club, said:
“The Budget confirmed that inheritance tax is already one of the government’s most dependable revenue raisers. At the start of this Parliament IHT brought in £8.3 billion a year and by 2030/31 that figure is forecast to rise to £14.5 billion – an extraordinary increase driven largely by frozen thresholds and a stealthy approach to raising revenues without major announcements that cause a stir. This confirms that the inheritance tax rules in place are already doing their job as one of the Treasury’s quietest – and most reliable – revenue raisers.
“The Nil Rate Band and Residence Nil Rate Band – £325,000 and £175,000 respectively – were already frozen until April 2030. The Budget extended that freeze by a further year, meaning they will now remain unchanged until April 2031. Had these thresholds risen with inflation, far fewer estates would be paying any inheritance tax at all.
“The same approach has been applied to reliefs. The new £1 million allowance for 100% Business Property Relief and Agricultural Property Relief, due to take effect from next April (2026), will also be frozen until April 2031. While this still represents a significant restriction compared to the previous system, there was at least one welcome reversal. The government has confirmed that this £1 million allowance will now be transferable between spouses and civil partners. That change removes the pressure many families felt to ‘use up’ the allowance on first death and brings BPR and APR more into line with other inheritance tax allowances.
“Taken together, these measures show a government that is still squeezing more revenue out of inheritance tax, but is running out of subtle ways to do it. Freezes, restrictions and quiet extensions in the form of Fiscal Drag can only go so far. There is only so much more that can be raised through this way. That reality applies well beyond IHT. At some point, if the government wants more money, it will have to be honest with voters and raise taxes openly and in doing so run the risk of losing votes in the next election.”
Will Hale, CEO of Key Advice & Air:
“These latest figures, alongside the confirmation in last month’s Budget that the Inheritance Tax nil rate band will remain frozen at its current level of £325,000 until April 2031, mean that the record-breaking £9bn+ in IHT receipts expected in 2025/26 will continue to grow in the years ahead.
“Furthermore, with pensions being brought into the scope of IHT from April 2027, it is clear that efficient transfer of wealth through the generations is becoming ever-more complex. This should be viewed as a great opportunity for advisers to demonstrate the value they deliver but planning strategies need to be reviewed in light of the changes to the tax environment.
“With over £3.7 trillion in property equity in the hands of the over 55s, it is crucial that the home forms part of the plan and that advice considers how products such as modern lifetime mortgages can form part of efficient intergenerational wealth planning.”
Stephen Lowe, director at retirement specialist Just Group:
“Inheritance Tax continues to be a quiet but powerful revenue engine for the Treasury, with another bumper year of receipts on the cards as rising asset prices, frozen thresholds and tighter exemptions do the heavy lifting.
“With record-breaking takings rolling in and last year’s Budget reforms still feeding through, Inheritance Tax is securing its spot as one of the Treasury’s most dependable money-spinners.
“In a changeable fiscal environment, it is important that anyone who is uncertain or concerned that their estate may be subject to IHT gets ahead of the game. An up-to-date valuation of their estate, especially an assessment of their property wealth, will be crucial to future planning.
“Estate planning is complex and it’s not made any easier when the rules are shifting. Many families who wish to manage their affairs efficiently will benefit from professional financial advice.”
