News
Inheritance tax (IHT) continues to generate increasing revenue for HMRC, with April 2025 alone bringing in £800 million. This is a rise of £97 million compared to April 2024, or a 13.8% year-on-year increase. The broader picture shows the 2024/25 tax year setting a record £8.2 billion in IHT receipts.
This growth isn’t new; since 2009/10, when inheritance tax brought in £2.4 billion, receipts have steadily climbed—both in real terms and as a proportion of the UK’s GDP. In fact, IHT now makes up an estimated 0.28% of GDP, nearly double the 0.15% seen in 2009/10.
Why Are Receipts Increasing?
A few key drivers are contributing to this trend. Since March 2021, the nil-rate bands for inheritance tax have been frozen—a policy set to continue until 2030. Meanwhile, rising property prices, often the biggest asset an individual has, and strong investment markets have increased the value of many estates, pushing more of them above the tax threshold.
And the upward pressure isn’t over. The Autumn Budget 2024 announced significant reforms to Agricultural and Business Relief (effective April 2026) and the inclusion of unused pensions in estates from April 2027. These changes are likely to see the inheritance tax revenue increase further for HMRC in the future.
What Does the Future Hold?
According to the Office for Budget Responsibility, nearly 10% of estates will be subject to inheritance tax by 2030. That’s more than double the 4% of estates affected in 2020/21.
This shift is prompting more individuals and families to consider how inheritance tax might affect their legacy and whether steps can be taken to reduce the impact.
“A Voluntary Levy”?
To quote former Labour Chancellor Roy Jenkins:
“Inheritance tax is, broadly speaking, a voluntary levy paid by those who distrust their heirs more than they dislike the Inland Revenue.”
While tongue-in-cheek, the quote underscores the importance of effective inheritance tax planning.
That said, everyone’s priorities are different. Some value the reassurance of retaining capital for life’s uncertainties and are accepting of any potential inheritance tax that comes with this, whilst others prefer to pass on as much as possible to loved ones or spend their wealth during their lifetime.
Planning Ahead
There’s no one-size-fits-all approach to inheritance tax planning. Each situation is unique, and careful, tailored planning is essential to align financial strategy with personal goals and values.
What’s more, IHT planning isn’t static. Legislative changes can undo previous strategies, and personal circumstances often evolve. Regular reviews and proactive planning are crucial to staying on course.
If you would like to speak with your Financial Planner here at Eldon, then please do not hesitate to get in touch with us.
