{"id":99180,"date":"2025-08-21T11:14:11","date_gmt":"2025-08-21T11:14:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/99180\/"},"modified":"2025-08-21T11:14:11","modified_gmt":"2025-08-21T11:14:11","slug":"inheritance-tax-receipts-hit-record-high-as-high-property-prices-drag-more-families-into-the-net","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/99180\/","title":{"rendered":"Inheritance tax receipts hit record high as high property prices drag more families into the net"},"content":{"rendered":"

Inheritance tax<\/a> receipts are on track to reach \u00a39billion by the end of the tax year, as monthly figures reach a new record high.<\/p>\n

The latest HM Revenue & Customs figures show that inheritance tax (IHT) receipts between April and July 2025 reached a record \u00a33.1billion.\u00a0<\/p>\n

It represents a \u00a3200million increase compared with the same period a year ago – and it\u2019s only set to rise as rising property prices drag more families into the net.\u00a0<\/p>\n

The headline rate of IHT is 40 per cent, charged on anything over the \u00a3325,000 ‘nil-rate band’.\u00a0<\/p>\n

People passing on their home to direct descendants, children and grandchildren, are given an extra \u00a3175,000 allowance.<\/p>\n

Spouses and civil partners can also share their allowance, meaning a couple can pass on a total of \u00a31million to their children tax-free.<\/p>\n

The nil-rate band remains frozen until 2030, and with property prices still elevated, an increasing number of families will have to pay the death tax.\u00a0<\/p>\n

\"Thousands <\/p>\n

Thousands more families will incur IHT due to frozen thresholds and upcoming changes<\/p>\n

Tax experts at Irwin Mitchell Private Client Advisory predict IHT receipts are on track to exceed \u00a39billion by the end of the current tax year, reaching \u00a310billion by 2026-27.<\/p>\n

\u2018It now looks likely that IHT receipts will exceed \u00a39billion by the end of March 2026, and following the significant changes due to be introduced in 2026-27, I wouldn\u2019t be surprised if the number is closer to \u00a310billion 12 months later,\u2019 said partner Andrea Jones.<\/p>\n

Elsewhere, PAYE income tax<\/a> and National Insurance contributions reached \u00a3160.6billion over the same period, up \u00a313.5billion year-on-year.<\/p>\n

As with IHT, frozen thresholds are dragging more workers into higher tax bands, while businesses shoulder rising National Insurance Contribution costs.<\/p>\n

Will there be more changes to inheritance tax?<\/p>\n

Last autumn, the Chancellor announced a series of changes to IHT which will see thousands more families liable to pay the tax.<\/p>\n

From April 2026, full Agricultural and Business Property reliefs will be capped at \u00a31million per individual before dropping to 50 per cent relief on assets over that value.<\/p>\n

The following year, unused pension pots will be included in a person\u2019s estate for IHT purposes, which is expected to bring more families into the scope of IHT.<\/p>\n

\u2018We won\u2019t see how much money [the changes] bring in through the Treasury door until well after those dates,\u2019 said Ian Dyall, head of estate planning at Evelyn Partners.\u00a0<\/p>\n

\u2018However, it is well known that families, and especially wealthier ones, tend to take steps to mitigate significant tax increases and to change their behaviour, which raises the risk that the tax take disappoints\u2019<\/p>\n

Financial advisers have reported an uptick in clients gifting more cash to their children and grandchildren to lower their IHT bill, but Reeves could soon put a stop to this.<\/p>\n

She is reportedly eyeing a lifetime gifting allowance<\/a>, which would affect those who try to avoid IHT by giving away money to their family before they die.<\/p>\n

Another option for Reeves is to extend the seven-year rule to 10 years, although this would fly in the face of the reduction to five years, as first explored by the now-defunct Office for Tax Simplification.<\/p>\n

The seven year rule means gifts are free from inheritance tax if the giver survives for seven years after giving them.\u00a0\u00a0<\/p>\n

Dyall predicts changes to gifting rules are unlikely to move the dial enough, though.<\/p>\n

\u2018Funds gifted to younger people are more likely to be spent and fed back into the economy, and in a roundabout way boost VAT and stamp duty<\/a> land tax for instance.\u00a0<\/p>\n

‘Maybe Treasury officials are not too worried about the short term IHT receipts and more keen to get money moving out of tax-protected pensions?<\/p>\n

\u2018But this is still not going to raise the sort of sums that the public purse looks like it needs, certainly not in the short or medium term, so one wonders whether another move on IHT would be worth all the negative headlines.\u2019<\/p>\n

Meanwhile, the Treasury is also reportedly looking at new taxes on higher value homes or capital gains on primary residences in the Autumn Budget<\/a>.<\/p>\n

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