Inheritance tax (IHT) receipts reached £2.2 billion in the first three months of the 2025/26 tax year, according to figures released by HM Revenue & Customs (HMRC) this morning. The figure represents a £100 million increase on the same period last year and continues the long-term upward trajectory seen over the past two decades.
Industry experts have shared their views to this.
Shaun Moore, tax and financial planning expert at Quilter:
“The latest HMRC tax take data lays bare the impact of the government’s stealth tax strategy – and while it is lucrative in some areas, it is far from universally effective.
PAYE income tax and National Insurance contributions for April to June 2025 hit £120.8 billion, up £9.6 billion year-on-year. With income tax thresholds frozen, workers are seeing more of their earnings swallowed by the tax system. Meanwhile, higher employer NICs signal a clear shift in the burden toward businesses.
But not all tax changes have delivered. The government’s decision to slash Capital Gains Tax (CGT) allowances and hike rates has backfired. CGT receipts have fallen sharply – from nearly £17 billion in 2022-23 to £14.5 billion in 2023-24, and now to just £13.1 billion in 2024-25. What’s more, in the first six months of the year, CGT has raked in £11.8 billion, compared to £13.5 billion during the same period last year. The policy may have been designed to raise revenue, but it’s instead prompted behavioural shifts that have dented the tax take.
This is particularly relevant amid renewed speculation about a ‘wealth tax’. While taxing the wealthiest may sound politically appealing, the CGT experience shows that people will change behaviour or adjust their financial plans to mitigate the tax bills. A wealth tax could accelerate the exodus triggered by the abolition of non-dom status – undermining the very revenue it aims to raise.
Inheritance Tax (IHT) receipts, meanwhile, continue to climb. Between April and June 2025, IHT brought in £2.2 billion – £0.1 billion more than the same period last year. With nil-rate bands frozen until 2030 and property prices still elevated, more families are being caught in the IHT net, often without any deliberate wealth accumulation”
Stephen Lowe, Director at retirement specialist Just Group, said: “Rising asset prices and frozen thresholds are combining in a pincer movement to drive consecutive record collections of Inheritance Tax.
This year’s data, alongside reforms to the system announced at the Autumn Budget, shows that this trend is only set to accelerate in the coming years. It means Inheritance Tax is becoming an increasingly important revenue raiser for the Treasury amid creaking public finances.
Anyone who is uncertain or concerned that their estate may be subject to Inheritance Tax should get an up-to-date valuation of their estate, including a recent assessment of their property wealth. Estate planning is complex and difficult – especially with tinkering to the rules – and many families who wish to manage their estate efficiently will benefit from professional financial advice.”
Ian Dyall, head of estate planning at wealth management firm Evelyn Partners, says:
“The June figure means that Inheritance Tax revenues for this financial year so far are running 4.8% ahead of the same period last year. And let’s not forget that last year was a record one.
Even with the relative softness in the property market suggested by recent house price indices, the trend for more families and more assets attracting IHT liabilities is set to continue as nil rate bands remain frozen.
Property prices and equity valuation remain at or near all-time highs, and once business and agricultural property reliefs are watered down from next April, and then unspent pension funds become subject to IHT calculations from April 2027, there’s likely to be big jumps in IHT liabilities across the UK, and not just in the South East where they are traditionally concentrated.
Households however can take action, whether that is using annual gifting allowances, drawing down on their pensions to spend or gift some funds, or setting the clock ticking on larger lump-sum gifts.
Many people might need to look at their will and death benefit nominations afresh to accommodate the new IHT rules on the horizon, while others still might think it worth insuring their beneficiaries against a growing IHT burden by writing whole of life insurance policies into trust.
What families shouldn’t do as the Budget reforms change the rules of estate planning, is nothing; and neither should they take drastic steps themselves without professional advice. Estate planning really is an area where expert advice can not just prevent costly mistakes but also keep a higher proportion of assets in the family.”
Commenting on HMRC IHT receipts reaching £2.2 billion, Tim Snaith, Partner at Winckworth Sherwood, said: “IHT revenues continue to steadily rise due to the prolonged freeze on IHT thresholds. The nil-rate band (NRB) and the residence nil-rate band (RNRB) have not been adjusted for inflation or rising property values, which means more estates are becoming liable for the tax as asset values increase. It remains a persistent and unavoidable inheritance tax planning issue, and one that should not be ignored. To avoid unexpected financial burdens, it is crucial for individuals to regularly review their wills and estate planning, with professional legal advice, to manage their wealth efficiently.”
Simon Martin, Head of UK Technical Services at Utmost Wealth Solutions, a leading provider of insurance-based wealth solutions, commented:
On Inheritance Tax statistics:
“Inheritance Tax is fast becoming a lucrative revenue stream for the Treasury. We are seeing more and more families being pulled into the Inheritance Tax net thanks to frozen thresholds, rising asset prices and restrictions to reliefs at the Autumn 2024 Budget.
Due to the recent changes to the IHT regime, alongside an increasing proportion of the population being impacted by IHT, we continue to see strong and growing demand for financial advice. Families are looking to understand how the new rules may affect their estate planning amid a wider rethink of intergenerational wealth strategies.
On Capital Gains Tax:
The increase in Capital Gains Tax rates and tightening of the annual exemptions at the Autumn Budget is likely to lead to a significant increase in receipts in this area over the coming years.
The OBR is predicting that CGT receipts will rise by nearly 50% in this 2025/26 tax year, reaching around £20 billion. Behavioural changes are likely to be a key driver of this surge, as the tax paid on disposals and property sales around the Budget will be reflected in this year’s data with CGT receipts primarily collected in January.
With the 2025 Autumn Budget now rumoured to herald further tax rises, people will need to be aware of how the current regime may affect their financial plans and whether regulated advice can help achieve more efficient use of their assets.”
Nicholas Hyett, Investment Manager at Wealth Club said:
“Inheritance tax continues to be a meal ticket for HMRC. While wealth taxes, IHT’s uglier sibling, will be in the spotlight in the run up to the Autumn Budget it wouldn’t be entirely surprising to see further tinkering with IHT too.
As things stand inheritance tax may only affect a small percentage of estates, but that number is on the increase as an ever greater number of estates become liable for the most hated of taxes. This is a result of years of freezes in thresholds, matched with increasing house prices and rising inflation. Families who wouldn’t consider themselves to be wealthy at all may now face a bill on the passing of a loved one.
The current inheritance tax allowance has been frozen at £325,000 for 16 years, and remains frozen for another 5 years until 2030. The £175,000 residence nil rate band hasn’t changed since 2020. These freezes are a form of stealth tax, which allows the government to increase their take without a backlash from a headline grabbing tax hike, but still contribute to the highest tax burden in 70 years.
The Chancellor has already hinted at U-turn on IHT for non-doms, thanks to the exodus of wealthy individuals over the last few months. But farmers who are lobbying hard for their own cause, have yet to see any relief, and rumours swirl that AIM could be a victim of double dipping as the Chancellor comes back to the UK’s growth stock market looking for tax revenues.
In this environment lifetime gifts are probably more attractive than ever, particularly regular gifts out of leftover income since these are immediately free of inheritance tax. This approach is particularly popular with grandparents, who use it to pay for things like school or university fees. Avoiding double taxation from inheritance tax is a nice added sweetener.
Zena Hanks, partner at Saffery LLP, comments:
“It is interesting to see that the total HMRC receipts for April 2025 to June 2025 compared with the same period last year shows cash receipts were higher from Income Tax, Capital Gains Tax and National Insurance contributions (£9.4 billion higher at £120.5 billion).
PAYE Income Tax and NICs receipts for April 2025 to June 2025 are £120.8 billion, which is £9.6 billion higher than the same period last year. If you follow this through to the earnings and employment data in HMRC’s published statistics and, thinking through was has happened here, we’re seeing the increase in NIC starting to land which will be pleasing for the Chancellor. However, if you drill down into the employment stats you can see the number of payrolled employees in the accommodation and food service industry reducing by 108,000 compared to this time last year. This could indicate an industry responding to higher national minimum wages, plus the increase in the NIC rates and these changes are starting to have a negative effective for some of those businesses. The health and social work sector have seen an increase in employees so it’s not all bad news.”
