Inheritance tax (IHT) receipts hit £7.1 billion in the first ten months of the 2025/26 tax year, up £100 million on the same period last year, according to HMRC figures released today.
The Office for Budget Responsibility has forecast full-year IHT receipts of £9.1 billion, and with two months of the tax year remaining, the government appears on course to meet that target.
HMRC is taking more from the UK population’s estates amid growing public criticism that inheritance tax is increasingly falling on middle-class families once considered well beyond the reach of death duties, as the government refuses to change thresholds that have been frozen since 2009.
MP salaries have increased 45%, and average civil servant pay is up around 50% – 60% during that period.
In addition to freezing IHT general thresholds since 2009, the current Labour government has attempted to change thresholds for farmers, and was met with public rebuke and forced to U-turn on proposals.
“The government has made a pig’s ear of inheritance tax reform,” said Isaac Stell, Investment Manager at Wealth Club.
“Crackdowns on farmers and business owners proved unpopular and ultimately unworkable, forcing a partial retreat on relief thresholds. But years of frozen allowances, combined with new rules that will bring pensions into the scope of IHT, mean more ordinary families, not just the wealthy, are being pulled into the tax net.”
Rising property prices are playing a big part in the increase in IHT receipts, with the steady tick higher in average house prices and frozen thresholds ultimately resulting in those that aren’t considered wealthy having HMRC get their hands on their estate.
“I suspect underneath the overall figure there will be an upturn of IHT taken from UK regions outside the South East. The South East has traditionally made up the lion’s share of IHT liabilities and that will continue to be the case for a long time, given several decades of wealth creation in the region,” said Ian Dyall, Head of Estate Planning at wealth management firm Evelyn Partners.
“But property values in and around London have levelled off in recent years, and even fallen in real terms in some areas compared to general inflation, while elsewhere in the country house prices had seen double-digit annual increases. That could mean many families in the South West, Midlands and North of England are being dragged into the potential IHT net by the increase in their home’s value, probably without realising it.”