Inheritance tax receipts have reached a staggering £8.5 billion in what experts describe as a record year for the Labour government and HMRC. The tax authority collected a record £8.5 billion in inheritance tax (IHT) during the 2025/26 tax year.
This figure represents an increase of £200 million compared to the previous year. Receipts have risen steadily from £5.3 billion in 2020/21, to £6.1 billion in 2021/22, £7.1 billion in 2022/23, £7.5 billion in 2023/24, and £8.2 billion in 2024/25.
Middle-Income Families Hit Hard
Rachael Griffin, tax and financial planning expert at Quilter, said: "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."
Pension Rule Changes from 2027
From 6 April 2027, most unused pension funds and death benefits will be included in a person's estate for inheritance tax purposes, removing their current status as an IHT-efficient vehicle. This change brings pensions into the 40 per cent IHT net, potentially resulting in higher tax on estates exceeding the £325,000 threshold.
Sarah Coles, head of personal finance at AJ Bell, warned this month that incoming changes to IHT are expected to pull 10,500 additional estates into the IHT net that year. A further 38,500 estates already liable will see their bills increase, with the average rise amounting to £34,000, according to AJ Bell data. In total, 49,000 estates would be impacted.
Expert Advice on Planning
John Chew, tax, trusts and estate planning expert at Canada Life, said: "The earlier families start to plan, the more scope they have to use allowances and exemptions, make gifts in a tax efficient way, and structure their affairs so that more of their wealth goes to loved ones." He stressed that professional financial advice has become essential given the complexity of the rules and the growing number of estates likely to face charges.
