Data from HM Revenue and Customs shows that Inheritance Tax receipts for April 2025 to August 2025 were £3.7 billion, which is £0.2 billion higher than the same period last year – an increase of 5.7%.
The continued rise in inheritance tax receipts is the result of ‘fiscal drag’, with a long-standing freeze on the IHT nil-rate bands (NRBs) spanning a period when asset prices have risen.
With the NRBs frozen until 2030, raised property values and investment assets are drawing more families into the IHT net—often without them realising it. This is before the changes to IHT reliefs announced at the 2024 Budget have come into force, including pensions being liable for IHT in the longer term: these changes that are already reshaping estate planning.
Ian Dyall, head of estate planning at wealth management firm Evelyn Partners, comments: “Without action on the part of families, the steady increase in estates and assets liable for IHT due to asset growth could turn into a surge once those rule changes go live. The inclusion of defined contribution pension pots in estates from April 2027 has attracted most attention, with its potential impact on any household with pension assets, but the dilution of business and agricultural property reliefs from April 2026 comes first and will significantly expand the scope of taxable wealth – not just in the well-publicised case of farms but much more widely across quite modest family businesses of all sorts.
“These changes mean that many traditional estate planning strategies—such as mirror wills or sole ownership of business assets—may no longer be optimal. Families that own businesses need to be proactive: for example, leaving business assets directly to children or into a trust on first death, rather than to a spouse, could preserve valuable allowances. Similarly, drawing down pension pots earlier or using the ‘normal expenditure from income’ exemption for gifting could help mitigate future liabilities.
“The rise in receipts is not just a fiscal story, it’s a wake-up call. Many households are sleepwalking into substantial tax bills. But families should also remember that estate planning is not just about tax efficiency, it’s about ensuring that wealth is passed on in a way that meets the family’s objectives and avoids unnecessary financial stress for beneficiaries, while in some cases preserving business continuity.”
