{"id":549154,"date":"2026-04-25T00:06:14","date_gmt":"2026-04-25T00:06:14","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/549154\/"},"modified":"2026-04-25T00:06:14","modified_gmt":"2026-04-25T00:06:14","slug":"inheritance-tax-receipts-hit-record-high-as-government-targets-property-owners","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/549154\/","title":{"rendered":"Inheritance tax receipts hit record high as government targets property owners"},"content":{"rendered":"

\"\"<\/a>Inheritance tax receipts have reached a new record high over the past financial year, driven by tighter rules affecting property and wealth transfers.<\/p>\n

Official figures released on Thursday show that inheritance tax (IHT) receipts rose to \u00a38.5bn in the 2025\u201326 tax year, up from \u00a38.3bn in the previous year.<\/p>\n

The increase comes amid a broader rise in government revenues, which climbed by more than 9%, or \u00a387.7bn, compared with the financial year ending 2025.<\/p>\n

The latest rise reflects the combined impact of long-standing policy measures, including the freeze on the \u00a3325,000 nil-rate band and stricter rules introduced alongside the government\u2019s non-dom reforms. Together, these have steadily pulled more estates into the tax net, pushing receipts higher year on year.<\/p>\n

Further upward pressure is expected to persist until around 2031, when current thresholds are due to be unfrozen.<\/p>\n

Notably, the latest figures do not yet capture the full impact of more recent changes, including the extension of inheritance tax to certain family businesses and agricultural property, as well as the decision to bring pension savings into scope \u2013 measures that only came into force this month and are expected to further broaden the tax base in future years.<\/p>\n

Ian Dyall, head of estate planning at wealth management firm Evelyn Partners, commented: \u201cInheritance tax receipts for the 2025\/26 financial year are about 2.4% higher than the previous year. No surprises on the rise but as we have seen in recent months it does look like the rate of increase is slowing, and certainly this is less than previous annual rises in the IHT take.<\/p>\n

\u201cFor years, IHT revenues have been boosted quite significantly as frozen nil\u2011rate bands steadily draw more estates and assets into the tax net as values increased.<\/p>\n

\u201cThe backdrop now, however, is slightly altered: London house prices, which have historically acted as a big engine of IHT exposure, have cooled noticeably over recent years. Official data yesterday revealed the largest property value decline in inner London since the global financial crisis, with house prices in some of the most expensive London boroughs falling for the fifth month and at double-digit rates in February. Across the South East property prices have pulled back in real terms in the last few years.<\/p>\n

\u201cThat softening is probably slowing the extent to which purely inflation-driven growth has pushed estates over IHT thresholds, particularly for those whose wealth is concentrated in property rather than diversified investments.<\/p>\n

\u201cYet receipts are still rising, because with decades of wealth accumulation and many years of frozen allowances, even modest asset growth can inflate IHT bills, regardless of medium\u2011term property market movements. Meanwhile, an ageing population means more estates, and more estates belonging to the asset-rich boomer generation, are being assessed as time goes by.<\/p>\n

\u201cHigher interest rates and surging \u2013 albeit volatile \u2013 markets have also boosted cash balances and investments in recent years, increasing estate values at death even where headline property prices have stalled. At the same time, many families continue to delay or avoid difficult conversations about estate planning, often underestimating the cumulative impact of frozen thresholds.<\/p>\n

\u201cThe key message for families is that IHT remains a long\u2011term planning issue, not a cyclical one. Falling house prices may ease the pressure at the margins, but without proactive planning, more estates will continue to contribute to rising HMRC receipts.\u201d<\/p>\n

Tougher enforcement\u00a0<\/p>\n

Susannah Streeter, chief investment strategist, Wealth Club, believes that the\u00a0government has arguably made a mess of inheritance tax reform.<\/p>\n

She said: \u201cCrackdowns on farmers and business owners proved unpopular and ultimately unworkable, forcing a partial retreat on relief thresholds. 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. \u00a0Inheritance tax receipts have hit a fresh high of \u00a38.5bn, surpassing last year\u2019s total and marks the fifth consecutive annual record.<\/p>\n

\u201cHMRC\u2019s tougher enforcement is adding further pressure at what is already a difficult time for bereaved families. With the tax base widening and sharp \u2018cliff edges\u2019 in the relief system still in place, proactive planning and accurate reporting have never been more important.<\/p>\n

\u201cRecent reporting also highlights growing frustration that inheritance tax is increasingly affecting middle-income households, particularly those whose wealth is concentrated in property or retirement savings. Frozen thresholds, unchanged for years, mean more estates are being pulled into liability even without meaningful gains in real-terms wealth.<\/p>\n

\u201cMeanwhile, HMRC compliance activity continues to rise. More than 14,000 bereaved families have been investigated for potentially underpaid inheritance tax since 2022\u201323, with case volumes running ahead of last year. These enquiries, often triggered by data matching and valuation checks, can last months or even years and may result in additional tax, interest and penalties.<\/p>\n

\u201cTaken together, rising asset values, static allowances and expanding reporting requirements are creating a system that is increasingly out of step with economic reality, drawing in estates that would previously have fallen outside the inheritance tax net and catching many families off guard.\u201d<\/p>\n

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