Following this morning’s news that inheritance tax receipts are up 11.8% in the last year reaching a record breaking high with a £0.8 billion rise, industry experts and professionals have shared their thoughts and views below.
Andrew Zanelli, head of technical engagement at Aberdeen Adviser said: “IHT continues to bring in more money than ever. And the plan to bring pension pots into the fold, coupled with frozen thresholds, mean more and more people could face a tax charge.
From our discussions with advisers, we’re hearing some people are making hasty pension withdrawals or holding back on pension saving to try and avoid IHT issues down the line. Now, more than ever, it’s critical to keep the enduring power of pensions in mind as for most people, they’re going to remain the most efficient way to save for retirement compared to other tax wrappers.”
Nicholas Hyett, Investment Manager at Wealth Club said:
“Inheritance tax continues to be a meal ticket for HMRC. It may only affect a small percentage of estates, but that number is growing. OBR estimates suggest nearly 10% of estates will pay death duties by 2030 due to increasing house prices, changes to inheritance tax rules and years of allowance freezes.
While we don’t expect to see any more changes to Inheritance Tax announced at next week’s Spring Statement, the changes announced in the autumn are yet to kick in and will increase the inheritance tax take substantially over the next few years.
The main inheritance tax allowance has now been frozen at £325,000 for 15 years, and remains frozen for another 5 years until 2030, while 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.
With inheritance tax reliefs for AIM and private businesses set to be severely restricted, it has rarely been more difficult to avoid the taxman having your cake and eating it too.
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.”
Richard Bate, head of private wealth at national law firm Weightmans, said: “Frozen inheritance tax (IHT) thresholds mean that more families are being drawn into the IHT net, often without realising it. Considering where average property values are right now, relatively modest estates, often built up by middle-income savers, have a potentially significant tax bill to consider.
The nil-rate band – the value at which an estate qualifies for IHT – is locked at £325,000 until 2030 so, even if your property is below the threshold now, it could easily tip over in the next few years purely from effect of natural inflation. Adding to the increasing pressure are the changes to agricultural and business reliefs, the inclusion of pension benefits to calculate a taxable estate and the domicile rules based on residence to calculate which assets are within the scope of IHT – these will all make it more difficult to manage one’s tax burden.
To limit exposure, early action is key. Despite speculation about changes to the rules about gifts giving away assets early can help reduce future liabilities and could take the form of regular gifts out of income, gifts up to annual allowances or larger transfers that fall under the current seven-year rule. For those with wealth tied up in property or investments, more structured approaches may be beneficial. Setting up trusts, or even family investment companies, can provide greater flexibility and asset protection.
The reality is that IHT is affecting more estates than ever before. Without careful planning, families may be forced to sell key assets, at an inopportune time just to cover tax demands. Taking proactive steps now can help safeguard wealth for future generations.”
Jonathan Halberda, specialist financial adviser at Wesleyan Financial Services, said: “We’re seeing a significant shift in how people approach legacy planning as inheritance tax (IHT) receipts continue to rise, and with the looming changes that will bring pensions into IHT’s scope.
Many people who once relied on their pensions to pass wealth to loved ones are now taking proactive action earlier, including some who are adopting DIY strategies to try and reduce their potential tax burden. This includes using information found online, and even guidance from AI.
While it’s great to see more engagement with estate planning, IHT rules are complex, and what works for one person may leave another worse off. That’s why it’s more important than ever to seek expert financial advice. A professional adviser can review your unique circumstances, ensure you make the most of your allowances, and help structure your estate so your loved ones inherit your assets in the most tax-efficient way possible.”
Simon Martin, Head of UK Technical Services at Utmost Wealth Solutions, said: “Inheritance Tax has already racked up another record tax-take in 2024/25 and, with one more month of receipts still to be counted, it looks set to substantially exceed the last tax year’s total. The freeze in the IHT thresholds and rising asset prices are the likely drivers of this fiscal boost for the Treasury.
Ahead of next week’s Spring Statement and despite lobbying in some areas, we are not expecting any further reforms to the Inheritance Tax regime but there will be updated projections from the OBR. This will be notable given the further widening of the scope of Inheritance Tax from April 2026, as well as the changes to IHT on pensions in 2027, which mean that the tax is set to continue delivering record sums for the Chancellor throughout the rest of the decade.
Following the changes announced at the Autumn Budget, we have already seen an uptick increase in clients seeking professional advice around Inheritance Tax to ensure they understand how the reforms will impact them.”
Shaun Moore, tax and financial planning expert at Quilter said:
“HMRC’s latest figures reveal that inheritance tax (IHT) receipts from April 2024 to February 2025 now stand at £7.0 bn, which is £0.7 bn higher than the same period last year.
The steady rise in IHT receipts has become an inescapable feature of the tax system. With the nil-rate band (£325,000) and residence nil-rate band (£175,000) frozen until 2030, the government has ensured that more estates are pulled into paying this deeply unpopular tax. Rising property prices, particularly in the South East, are compounding the issue, leaving many families unexpectedly liable for a 40% tax charge on inherited wealth.
Further policy changes will only exacerbate the issues. Restrictions on Agricultural Property Relief and Business Relief from April 2026 could place additional strain on family-owned farms and businesses, while from April 2027, unused pensions will also fall within the scope of IHT. What was once a tax on the wealthiest estates is increasingly burdening middle-income families with no obvious route for mitigation.
Despite repeated calls for reform, the government continues to rely on IHT as a growing source of revenue. Without intervention, the number of families caught in the IHT trap will continue to rise, forcing many to rethink their estate planning strategies.”
Stephen Lowe, Director at retirement specialist Just Group, said: “Another year, another record-busting Inheritance Tax haul for the Treasury – that’s four consecutive years of all-time highs.
“Frozen thresholds and rising property prices have been the predominant forces behind this increase to date but changes announced at the Autumn Budget, which will be implemented from April 2026, look set to bring in even greater amounts over the remainder of the decade and beyond. The removal of pension death benefits from Inheritance Tax will come into force from 2027 and is likely to inflate receipts for the Chancellor even more.
It emphasises the importance of people getting an up-to-date valuation of their estate, including a recent assessment of their property wealth, to help them understand if they are likely to be liable for Inheritance Tax. Estate planning is complex and professional financial advice can be immensely helpful for people who want to manage their estate efficiently.”
Cara Spinks, Head of Life & Health at leading financial services consultancy Broadstone, said: “The latest IPT receipts confirm that 2024/25 will be yet another record IPT haul for the Chancellor – and break the previous record by some distance.
Demand from consumers in the independent healthcare market has continued to increase in recent months. Rising economic inactivity due to long-term illness and NHS waiting lists has seen individuals and employers increasingly turn to the insurance sector to provide health and wellbeing support, which in turn has increased premium income and tax receipts.
“This shift towards the independent sector has been an important part of alleviating some pressure on public health services. Health insurance products, such as private medical insurance and health cash plans, offer access to vital preventative and supportive treatments.
“We continue to encourage the government to consider removing IPT from health insurance products. Doing so would align with its mission to boost productivity and economic activity, while also supporting broader goals of reducing NHS waiting lists, maintaining a healthy workforce, and driving long-term economic growth.”
Will Hale, CEO of Key Advice, regarding this morning’s IHT figures said:
“Inheritance Tax receipts for April 2024 to February 2025 are £7.6 billion and £0.8 billion higher than the same period last year and yet another record. The Government expects the records to keep on being broken with the Office for Budget Responsibility forecasting total receipts of £9.7 billion for the 2028/29 tax year.
The rise in IHT receipts reflects partly the ongoing freeze on thresholds with last year’s Budget extending it to 2030. The record-breaking receipts also reflect increased wealth and highlight the increased complexity of planning for IHT and retirement.
There is a clear need for a fundamental reassessment of the role of property wealth in financial planning with many older clients owning considerable capital tied up in their homes which should be put to work funding their retirement and, where appropriate, helping children and grandchildren on to or step-up the property ladder with gifting.
Modern lifetime mortgage products can help with tax efficient intergenerational wealth transfer, subject, of course, to high-quality financial advice. As importantly, the money being paid out in IHT could arguably be better put work helping boost the UK economy and support the Government’s growth agenda.
Boosting retirement income or helping children and grandchildren with their home ownership aspirations are far more effective means of promoting economic growth and wealth creation. Much more needs to be done to simplify gifting rules in support of the growth and social mobility.”
