Inheritance Tax (IHT) has long been regarded as a concern for a relatively small number of wealthy families. However, recent figures suggest that this perception is increasingly out of date – and the years ahead are likely to see IHT become an even more prominent part of mainstream financial planning.
The latest data from HM Revenue & Customs shows that IHT receipts for the period from April to December 2025 reached £6.6 billion, an increase of £200 million compared with the same period the previous year. While this rise may not appear dramatic in isolation, it continues a well-established upward trend that has been building for some time.
A key driver of this growth is fiscal drag. The Nil-Rate Band and Residence Nil-Rate Band have remained frozen, while property prices, investment portfolios and business values have continued to rise. As a result, more estates are being pulled into the IHT net, including families who may not consider themselves especially wealthy.
Looking ahead, the outlook suggests a much sharper increase in IHT receipts, largely due to structural changes to the tax system rather than simple asset growth.
From April 2027, unused pension funds are scheduled to be brought into the scope of Inheritance Tax. For many families, pensions have historically been one of the most tax-efficient assets to pass on, often falling outside the estate for IHT purposes. Bringing pensions back into the calculation represents a fundamental shift and is likely to significantly increase the value of many taxable estates overnight.
This change alone is expected to trigger a surge in both IHT liabilities and planning activity. Many individuals who have never previously needed to consider IHT may find that, once pension values are included, their estate exceeds the available allowances.
Further pressure is also coming from changes to business and agricultural reliefs, with new caps reducing the level of protection these assets can provide. For business owners, this raises important questions about succession planning, liquidity, and the long-term security of both the business and the family that depends on it. A large IHT bill, particularly where wealth is tied up in illiquid assets, can create significant challenges if left unaddressed.
Official forecasts underline the scale of what is coming. The Office for Budget Responsibility expects IHT receipts to reach £8.7 billion in 2025/26, continuing the recent pattern of record tax takes. More strikingly, receipts are projected to rise to £14.5 billion by 2030/31, an increase of around 67% over five years.
What is clear is that Inheritance Tax is no longer a niche issue. It is becoming a central consideration for a growing number of families, particularly as pensions, property and business interests are brought more firmly into scope.
The good news is that IHT exposure can often be managed, but only with early, coordinated planning. Understanding the value of your estate, how different assets are treated, and what options are available can make a meaningful difference to the amount ultimately passed on to loved ones.
As the rules evolve, taking advice sooner rather than later is becoming increasingly important. If you would like to know more about ways to improve the tax efficiency of your estate then please get in contact.
