Inheritance tax take rises again as loved ones pay £200 million more
Inheritance tax receipts keep rising but there are rumours chancellor Rachel Reeves wants to tighten the rules again to increase the inheritance tax take even more to shore up struggling public finances.


Inheritance tax receipts have increased again as frozen thresholds continue to boost the tax take for the Treasury – amid rumours the government is eyeing ways to squeeze even more income from inheritance tax.
Income to the government from inheritance tax (IHT) for April to July 2025 was £3.1 billion, the latest HMRC figures show. This is an additional £200 million compared to the same period in 2024.
It means inheritance tax revenues for this financial year so far are running 6.9% ahead of the same period last year, which was a record one.
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The Office for Budget Responsibility's most recent forecast, published at the Spring Statement, projects another record year coming with IHT predicted to generate £9.1 billion for the Treasury in 2025/26. Revenues are expected to raise more than £14 billion in the 2029/30 financial year.
Ian Dyall, head of estate planning at wealth management firm Evelyn Partners, said the monthly receipts data reliably shows how fiscal drag is bringing more wealth into the scope of IHT.
But, he added, the numbers that really matter for wealthier households are those showing the overall state of the public finances, “because that’s what prompted last year’s Budget overhaul of IHT rules, and it’s not unthinkable that the transfer of wealth will be on the table again at the next Budget”.
The Treasury won’t get any benefit from the already announced dilution of business property relief and agricultural property reliefs until after next April, when they come into force, and the inclusion of unspent pension assets in estates doesn’t occur until April 2027, so the government won’t see how much money they bring in through the Treasury door until well after those dates. Dyall said this could encourage the chancellor to look for fresh ways to boost public income sooner.
“One of the easiest ways for families to reduce the threat of larger IHT bills is to gift during their lifetime, and as the seven-year rule allows unlimited amounts to be transferred and possibly leave the estate altogether, this is the natural escape route that the Treasury might seek to block off,” Dyall said.
Chancellor Rachel Reeves is reportedly planning a crackdown on the value of financial gifts individuals can make during their lifetime free of inheritance tax, including the seven year rule. This reduces the rate of inheritance tax due on the gift over time until seven years have passed and you can avoid inheritance tax altogether.
Frozen inheritance tax thresholds
Even without any more changes to the rules, the trend for more families and more assets attracting IHT liabilities is set to continue as nil rate bands remain frozen.
House prices and equity valuations remain at or near all-time highs, while the threshold for the main nil rate band of inheritance tax has been stuck at £325,000 since 2009, and the main residence nil rate band has remained at £175,000 since April 2020.
As well as the boost to IHT receipts that comes from fiscal drag of frozen allowances, the Treasury will be hoping for more inheritance tax revenue once business property relief and agricultural property relief are watered down from next April, and then unspent pension funds become subject to IHT calculations from April 2027.
“There’s likely to be big jumps in IHT liabilities across the UK, and not just in the South East where they are traditionally concentrated,” said Dyall.
How to reduce inheritance tax
Households however can take action to avoid inheritance tax. This could include using annual gifting allowances, drawing down on their pensions to spend or gift some funds, or making larger lump-sum gifts to hopefully reduce their IHT bill.
Many people might need to look at their will and death benefit nominations afresh to accommodate the new inheritance tax rules on the horizon, said Dyall.
Others still might think it is worth insuring their beneficiaries against a growing inheritance tax burden by writing whole of life insurance policies into trust, he added.
“What families shouldn’t do as the Budget reforms change the rules of estate planning, is nothing; and neither should they take drastic steps themselves without professional advice,” Dyall said.
“Estate planning really is an area where expert advice can not just prevent costly mistakes but also keep a higher proportion of assets in the family.”
Anyone who is uncertain or concerned that their estate may be subject to inheritance tax should get an up-to-date valuation of their estate, including a recent assessment of their property wealth.
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Laura Miller is an experienced financial and business journalist. Formerly on staff at the Daily Telegraph, her freelance work now appears in the money pages of all the national newspapers. She endeavours to make money issues easy to understand for everyone, and to do justice to the people who regularly trust her to tell their stories. She lives by the sea in Aberystwyth. You can find her tweeting @thatlaurawrites
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