INHERITANCE tax (IHT) receipts are up to £6.6 billion and it’s going to get worse next year – with financial experts warning “IHT revenue is going to explode in the coming years”.
The government raked in £6.6 billion through the first nine months of 2025/26, HM Revenue & Customs (HMRC) has revealed.
This represents an increase of 4% (£232 million), compared to the same period in 2024/25.
Figures from HMRC today also show that receipts from capital gains tax (CGT) were £13.6 billion, down 8.4% from £14.9bn in 2024.
Experts said IHT receipts will rise hugely in the coming years due to fiscal drag and pensions being taken into account for IHT too from 2027.
Riz Malik, Director at Southend-on-Sea-based R3 Wealth, said IHT is being targeted by Labour.
He added: “IHT revenue is going to explode in the coming years and we are receiving an increasing number of enquiries. With pensions being added to the pot in 2027, more and more people will fall into the realm of IHT. I am dealing with one client who HMRC would be the biggest beneficiary if she died, versus what the children would receive.
“With increasing house prices, more and more people are losing their residential nil rate band. Planning is essential if you want to safeguard your legacy. That is, unless you want it to contribute to the government coffers and don’t feel like you have paid enough during your working life.”
IHT revenue is going to explode
Rob Mansfield, Independent Financial Advisor at Tonbridge-based Rootes Wealth Management, said April 2027 will see pensions also taken into account with IHT.
He continued: “With frozen thresholds and inflation pushing prices up, IHT is only going to catch more people. This is before April 2027 when unused pensions are being brought into people’s estates.
“The Treasury will be rubbing their hands in anticipation of more money coming their way. The key to IHT planning is giving yourself as much time as possible as it can take a number of years to feel the full benefit.”
Colin Low, Managing Director at Ipswich-based Kingsfleet, said IHT receipts will rise even higher in the coming year and further.
He added: “These are the foothills of the mountain of IHT revenue expected in this parliament. The increase is only modest at present but with the changes announced these numbers will go up enormously.
“Already announced are the plans to make pensions subject to IHT and also make business and agricultural assets subject to estate charges too (although there have been some reductions to these in recent weeks).
“The public often feel aggrieved at the high (40%) rate of IHT as they see it as a further tax liability on assets that have been acquired from income which has already been taxed.”
Numbers will go up enormously
Anita Wright, Chartered Financial Planner at Ribble Wealth Management, said early planning needs to be undertaken if you’re worried about IHT.
He continued: “IHT receipts rising to £6.6bn does not surprise me. This is less about a sudden jump in ‘wealth’ and more about fiscal drag: house prices and accumulated savings have risen, while the nil-rate band has been frozen and is due to stay that way until at least April 2028.
“In plain English, more ordinary families are being pulled into the IHT net without doing anything different. The drop in capital gains tax (CGT) receipts looks behavioural. When markets are choppy and tax feels punitive, people delay selling assets, so fewer gains are crystallised and CGT falls even if values hold up. For those concerned about IHT, the key message is that early, structured planning is far more effective than last-minute mitigation.”
Photo by Joost Crop on Unsplash.
