According to HMRC, IHT receipts for the 2025/26 tax year reached £8.5 billion, up from £8.3 billion the previous year and significantly up from c.£5.1 billion in the 2019/20 tax year. While inheritance tax is often viewed as a concern only for the very wealthy, the data suggests that more ordinary families are now being drawn into the tax net.
Which factors are contributing to rising government IHT receipts?
Frozen tax‑free thresholds and rising property prices
The main driver is the prolonged freeze on the inheritance tax nil‑rate band, which has remained at £325,000 since 2009. The residence nil‑rate band, introduced to help families pass on the family home, has also been frozen.
Long‑term growth in property values has significantly increased the value of many estates. As property values increase but allowances do not, more estates become liable to tax through ‘fiscal drag’ – where tax thresholds remain static, dragging more people into scope.
Changes and reforms to reliefs
Recent reforms have restricted Business Property Relief. While 100% relief remains available, it is now capped at £2.5 million per individual, with relief reduced to 50% above this level. In addition, relief on AIM‑listed shares has been reduced from 100% to 50%.
In addition, further changes, including the future inclusion of unused pension funds within estates for IHT purposes, are expected to push receipts higher still in coming years.
How the rise in Inheritance Tax receipts is impacting families
Inheritance tax is charged at 40% on the value of an estate above available allowances. Without planning, this can significantly reduce the amount passed on to children and other beneficiaries.
For many families, the issue is not extravagant wealth, but a combination of property ownership, savings built up over a lifetime and a lack of up‑to‑date planning.
How JM Finn can help
Effective inheritance tax planning is not about avoiding tax at all costs, but about making informed decisions, using available reliefs and exemptions carefully, and aligning financial planning with wider family goals.
JM Finn works closely with clients and their professional advisers to provide a clear, structured approach to estate planning, including:
- Regular estate reviews – ensuring that wills, asset ownership and beneficiary arrangements reflect current legislation and family circumstances
- Inheritance Tax Portfolio Service – we offer an inheritance tax investment service that takes advantage of Business Property Relief. While the relief applied to qualifying investments has been reduced to 50%, it can still be possible to significantly mitigate Inheritance Tax using this method – it also offers the potential to receive dividends from your investment portfolio.
- Lifetime gifting strategies – where appropriate, to reduce the value of an estate while maintaining financial security
- Use of trusts – to help manage how and when wealth is passed on
- Investment planning with IHT in mind – including consideration of assets that may qualify for available reliefs
- Intergenerational planning – supporting conversations across generations to ensure intentions are understood and documented
Crucially, inheritance tax planning should not be left until later life. Starting early provides more flexibility and often a wider range of options.
Looking ahead
With inheritance tax thresholds set to remain frozen until at least the end of the decade and further reforms on the horizon, upward pressure on IHT receipts is likely to continue. For families who have not reviewed their plans recently, now is an appropriate time to take stock.
A considered approach, revisited regularly and tailored to individual circumstances, can help ensure that more of your wealth passes to the people and causes that matter most.
The investments and services discussed in this article may not be suitable for all investors. The information provided is of a general nature and is not a substitute for specific advice with regard to your own circumstances. You are recommended to obtain specific advice from a qualified professional before you take any action or refrain from action.
Investment carries risk and their value as well as the income from them can go down as well as up and investors may not get back the amount originally invested. Past performance is not a reliable indicator of future returns.
