Inheritance tax receipts hit a record £8.5 billion between April 2025 and March 2026, marking a fifth consecutive high.
Figures from HM Revenue and Customs show receipts are £0.2 billion higher than the same period last year. Receipts have more than doubled over the past 20 years, from £3.5 billion in 2006/2007.
A combination of rising house prices, particularly in London and the South East, and frozen thresholds have pushed more estates into paying inheritance tax every year.
Amit Joshi, managing director of wealth at Mattioli Woods, said: “Inheritance tax revenues continue to climb as frozen thresholds pull more families into the tax net. Rising property values and inflation are quietly turning what was once a tax for the wealthy into a bill for ordinary households. Estates that would have paid nothing a decade ago are now automatically liable, without a single announcement.
“What is most concerning isn’t the tax itself, but the lack of awareness. Families often only realise the impact when it’s too late to act. Inheritance tax has become a planning issue by stealth, and the cost of inaction is measured in lost choices, rushed decisions, and unnecessary tax.”
With pensions set to be included in the scope of inheritance tax from April 2027, experts warned that the pressure is set to intensify.
Rachael Griffin, tax and financial planning expert at Quilter, said: “Unused pension pots will fall within the scope of Inheritance tax from 2027, bringing what has long been the largest asset outside the estate firmly into charge. This policy change alone will turbo-charge receipts for years to come.
“What was once seen as a tax on only the wealthiest families is now firmly a middle‑income issue. With thresholds frozen and further policy changes still feeding through, IHT bills are becoming harder to mitigate, making early planning and professional advice increasingly important.”
Mark Lambert, head of onshore bond distribution at Chesnara Life (UK) said: “Advisers and clients are already in the countdown to changes coming in from April 2027. Combined with the ongoing freeze to the IHT thresholds until 2031, this means many families are likely to face increased exposure over the coming years.
“Many clients will need alternative solutions to pensions, and that is driving a surge in demand for the tax‑effective onshore investment bond wrapper, and associated trusts, which continue to move up the estate‑planning agenda.”
Wesleyan Financial Services said many clients are already reacting to rising inheritance tax, with nine in 10 advisers seeing increased pension withdrawals. However, the firm warned clients are trying to reduce a future IHT bill while triggering income tax today, and in some cases not improving their overall position.
Nick Henshaw, inheritance tax expert at Wesleyan Financial Services, commented: “The challenge is that these moves are often irreversible. Once funds leave a pension, they can’t be replaced, and in volatile markets clients may be locking in losses to solve a problem that’s still some way off.
“For advisers, the focus has to be on modelling before action. If a strategy doesn’t improve the overall outcome after tax and risk, it shouldn’t be happening. In volatile conditions, approaches that help manage sequencing risk – such as smoothed funds – can also play a role in avoiding poor timing decisions becoming permanent damage.
“The message is simple: don’t let urgency drive poor decisions. Without proper advice, the rush to reduce IHT could leave clients worse off in retirement.”
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