Inheritance tax receipts for the period April to December 2024 reached £6.3 billion, up £0.6 billion on the same period of the previous year.
The latest data from HM Revenue & Customs puts 2024/25 on course for a fourth consecutive annual increase in IHT-take for the Chancellor.
The upward trajectory over the past few years highlights the effect of the government’s freeze on IHT thresholds, coupled with rising property prices, which have seen more families dragged into the IHT net.
Simon Martin, head of UK technical services at Utmost Wealth Solutions, said: “Inheritance tax is delivering record receipts for the Treasury as asset prices rise while the thresholds remain frozen in place, a policy that has now been extended until the end of the decade.”
According to the Office for Budget Responsibility, policy changes announced at the Autumn Budget, including bringing pensions into the IHT scope from April 2027 and extending the freeze on the nil-rate band for a further two years, will add £2.5 billion in IHT receipts by 2029-30.
Martin explained: “Additional reforms such as charging IHT on pension wealth at death and limits to agricultural and business reliefs will raise billions more pounds in tax receipts for the government and increase the proportion of estates liable for the tax. However, there are steps to mitigate the impact of inheritance tax and so people should urgently assess the value of their estate to see if they are likely to be impacted.
“We are seeing a significant increase in clients seeking professional advice around inheritance tax to ensure they fully understand the implications of the reforms. There are complexities such as the tapering of the residence nil rate band for estates of a certain value which can potentially add to inheritance tax liabilities.”
Stephen Lowe, group communications director at Just Group, said: “The latest IHT receipts data for December will be a welcome end of year bonus for the Government’s coffers as the tax continues to deliver record sums.
“The latest changes to IHT announced by the Chancellor in the Autumn Budget are likely to see the Treasury collect billions more in inheritance tax before the end of decade. We encourage people to make sure they have an up-to-date valuation of their estate, including a recent assessment of their property wealth, to help them understand if they are likely to incur IHT.”
Shaun Moore, tax and financial planning expert at Quilter, commented: “This relentless rise is no coincidence. With inheritance tax thresholds frozen until 2030, more families are being pulled into the scope of IHT, and this trend shows no signs of slowing. Add to that the significant changes coming in April 2027, when pensions will be drawn into taxable estates, and the government looks set to cash in on an ever-expanding pool of taxpayers.”
Following the Government’s technical consultation on IHT on pensions, which closed on 22 January, Alastair Black, head of savings policy at abrdn, called for clarity from HMRC on the next steps.
“This consultation has highlighted exactly how complex IHT is so we hope the Government will take the opportunity to rethink the IHT system. Simplifying some of its elements could give families and advisers much-needed clarity and reassurance,” he said.
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