With the news of Inheritance Tax receipts for April 2025 reaching £0.8 billion, industry experts and professionals have shared their expertise:
Ian Dyall, Head of Estate Planning at wealth management firm Evelyn Partners, comments:
“The 2025/26 financial year opens where the previous one left off, with a predictable and substantial annual rise in Inheritance Tax receipts. Estimates last month revealed that IHT receipts for the 2024/25 financial year were 10.8% up on the previous one, and there’s nothing to suggest the current one will be any different.
“What has stirred up some interest in the Government’s intentions for IHT – aside from those announced at the October Budget – is the memo from the Deputy PM to the Chancellor leaked this week.
“That called for – among other tax rises – IHT relief on AIM shares to be removed altogether, which would go further than the current cut to 50% due for April 2026, and would save the Treasury £1billion. Whether this suggestion carries any weight with the Chancellor is unknown, but with the PM also rowing back on cuts to the Winter Fuel Allowance this week, questions are bound to arise around tax if the fiscal outlook doesn’t improve before the Autumn Budget.
“Some in Government obviously see the passing on of estates as a legitimate target for tightening up the tax net, so whether or not there are any changes to IHT reliefs at the next Budget, it would be surprising if we got to the next election without any.”
Stephen Lowe, Director at retirement specialist Just Group, said: “The Treasury has enjoyed four years on the trot of record Inheritance Tax receipts and this April’s figures show a rapid start to 2025/26 with the tax raising over three quarters of a billion pounds this month alone.
Rising IHT receipts to-date have been driven by the pincer movement of the ongoing freeze on thresholds alongside growth in asset prices. Further reforms announced at the Autumn Budget are likely to accelerate the Inheritance Tax haul even further over the coming years, especially proposed changes to the treatment of pension death benefits later this decade.
Anyone who is concerned their estate may be subject to IHT should make an up-to-date valuation of their estate, including a recent assessment of their property wealth, to understand if they may be liable to IHT. Estate planning is complex and many people who want to manage their estate efficiently will benefit from professional financial advice.”
Andrew Tully, Technical Services Director at Nucleus said:
‘IHT receipts have increased more than 50% over the past five years with the OBR suggesting significant increases will continue over the next few years. This first month of the new tax year is continuing that upward trend. Receipts will increase further in the years to come due to recent policy changes including limits to agricultural and business reliefs and extending the freeze in IHT nil-rate bands to 2029/30, as well as ongoing increases to property prices across the UK. If the Government’s proposals to include pensions within the estate for IHT purposes from April 2027 are introduced that will drive further strong growth.
These changes are likely to make IHT a more relevant issue for many more families within the next five years. Advisers can help clients mitigate these taxes by setting up trusts and making use of gift allowances and the spousal exemption.”
Laura Hayward, tax partner at professional services group S&W comments:
“The inheritance tax take for the Treasury has shown another year-on-year increase. With the nil rate band set to remain frozen until at least 2030 and already-announced reforms due to affect how inheritance tax is charged, we can expect to see this trend continuing. This will mean even more families being brought into scope for the tax and could leave many worrying how they are going to settle their bills when a loved one passes away.
In addition to frozen allowances, significant changes are on the way from April 2026 for business and agricultural property relief which will leave many families in a difficult position settling inheritance tax bills when a family business is passed on to the next generation. Combined with this, from April 2027, pensions will be brought into scope for inheritance tax purposes. If this pushes estates above £2 million, it can take someone from having a low inheritance tax exposure to a high one. This is because the taper for the residence nil rate band kicks in for estates over £2 million, which means taxpayers face the double whammy of inheritance tax on their pensions while also losing some or all their residence nil rate band.
Speculation is growing that the Chancellor will need to raise taxes at the Autumn Budget to meet spending commitments and this could lead to further changes being made to the charging of inheritance tax. This backdrop is bringing considerable uncertainty for many and should be a prompt for families to look at their tax planning position before any further possible changes are announced.
We are currently having lots of conversations with clients who want to know what they can do to mitigate against the announced inheritance tax changes, plus any further updates that may come at the Autumn Budget. Many are looking at how they can effectively make gifts to family members or invest tax-efficientlyto help reduce or eliminate inheritance tax bills. Gifts you make to other individuals are generally not subject to inheritance tax unless you die within seven years. There is also an annual gift allowance of up to £3,000 per tax year, and this will not be subject to inheritance tax even if you do die within seven years. To ensure that gifts are used in a responsible way, families often consider setting up trusts which provide an effective tool for tax efficiently passing on assets to the next generation in a controlled way.”
