HMRC Inheritance Tax Revenue Soars to £7.1 Billion as More Households Are Drawn Into Net
New official figures from HM Revenue and Customs have revealed that inheritance tax receipts for the period from April 2025 to January 2026 have reached a staggering £7.1 billion. This represents an increase of £100 million compared to the same timeframe last year, highlighting a significant upward trend in revenue collected from estates across the United Kingdom.
Frozen Thresholds and Rising Asset Values Create Perfect Storm
Under current UK regulations, the tax-free allowance for inheritance stands at £325,000 for individuals, or £650,000 for couples. However, experts warn that years of frozen thresholds, combined with steadily increasing property prices and asset values, are pulling more ordinary families into the inheritance tax net.
Isaac Stell, an investment manager at Wealth Club, commented on the situation, stating: "The government has made a pig’s ear of inheritance tax reform. Crackdowns on farmers and business owners proved unpopular and ultimately unworkable, forcing a partial retreat on relief thresholds."
He further explained: "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."
Middle Class Families Increasingly Affected
Recent analysis indicates growing public frustration that inheritance tax is increasingly impacting middle-income households, particularly those whose primary wealth is tied up in their family home or retirement savings. The static £325,000 threshold, set against background inflation in property markets, means many people who would not consider themselves wealthy are now facing substantial tax liabilities.
Ian Dyall, head of estate planning at wealth management firm Evelyn Partners, noted: "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."
Mr. Dyall elaborated: "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."
HMRC Enforcement Intensifies as Investigations Multiply
Alongside the widening tax base, HMRC has significantly increased its enforcement activities. Since 2022–23, more than 14,000 bereaved families have been investigated for potentially underpaid inheritance tax, with current year cases running well ahead of previous levels.
These inquiries, often triggered by data matching and valuation checks, can extend for months or even years, potentially resulting in additional tax demands, interest charges, and financial penalties. Isaac Stell warned: "At the same time, HMRC’s tougher enforcement is adding further pressure at what is already a difficult time for bereaved families. With the tax base widening and sharp ‘cliff edges’ in the relief system still in place, proactive planning and accurate reporting have never been more important."
Growing Need for Proactive Estate Planning
Financial experts emphasize that the combination of rising asset values, static allowances, and expanded reporting requirements has created a situation where estates that previously fell outside the inheritance tax threshold are now becoming liable. This development has left many middle-class families unprepared and potentially facing unexpected financial burdens during bereavement.
The situation underscores the increasing importance of comprehensive estate planning for households across all income brackets, not just the traditionally wealthy. As thresholds remain frozen while property values continue their upward trajectory, more UK families are finding themselves navigating the complexities of inheritance tax regulations for the first time.
