Thousands more pay inheritance tax with figures expected to double before decade’s end
Number of deaths triggering inheritance tax rose 13% in a year with more increases predicted as Rachel Reeves’ pension reforms apply from April 2027


The number of Brits paying inheritance tax on their loved ones estates has jumped again to near record highs, with experts calling it the ‘tip of the iceberg’ before Rachel Reeves’ reforms kick in.
Around 3,700 more deaths resulted in inheritance tax in the year 2022 to 2023, according to the latest figures from HMRC. This brings the total to 31,500 taxpaying IHT estates, an increase of 13% on the previous year.
The proportion of deaths liable for inheritance tax also rose to 4.62%, an increase of 0.23 percentage points compared to the tax year before. This proportion is now broadly equal to the previous 2016 to 2017 high.
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This 4.62% figure is predicted to double by the end of the decade to 9.5% due to chancellor Rachel Reeves’ reforms to inheritance tax, in particular making unused pensions subject to IHT.
We look at ways to reduce your IHT bill in a separate article.
Stephen Lowe, director at retirement specialist Just Group, said: “Reforms announced at the Autumn Budget 2024 are expected to significantly accelerate both the number and proportion of deaths that trigger IHT charges.
“It is estimated that around one in 10 deaths (9.5%) will be subject to inheritance tax by the end of the decade (2029/30) as these fiscal reforms kick in and pull ever more people into the thresholds.”
The removal of the pensions exemption from IHT will be the biggest driver of this increase with the Office for Budget Responsibility projecting that, from April 2027, this change will bring 31,200 more estates into scope of IHT before the end of 2029/30.
London and the South East account for 44% of the total inheritance tax charged across the UK. The lowest number of taxpaying estates were found in the North East of England, Northern Ireland, and Wales which HMRC attributed to lower house prices in those regions.
What are the new pension inheritance tax rules?
Under new government rules, from 6 April 2027, any unused pension funds will be included within the estate for IHT purposes.
Previously, it has not been uncommon to see people leave their pensions untouched altogether as a future inheritance for their kids, especially as, if they died before age 75, the whole pot could be taken IHT and income tax free.
With the new changes the total number of deaths resulting in an IHT charge is expected to increase, and financial advisers say there are many people who have been accumulating large pensions for their IHT benefits who now need an entirely new strategy.
Some are choosing to avoid inheritance tax by giving their money away before they die. Others are spending their pension faster than they would have done.
We look at whether the 4% pension rule is dead due to IHT changes and why the 6% pension rule could replace it in a separate article.
Inheritance tax ‘tip of iceberg’?
Scott Gallacher, director at financial advice firm Rowley Turton, warned many more people will be facing a significant IHT issue in the years ahead as a result of Reeves’ inheritance tax reforms.
At his firm, he estimates he’s moving from around 10% of his clients facing a significant IHT issue to the majority of them in the near future.
“This is the tip of the iceberg, or perhaps the calm before the storm. Without proactive planning, many more families are set to be caught in Rachel Reeves’ widening IHT net,” he said.
"It’s no longer just about house prices, as we now face the prospect of IHT hitting pensions, businesses and farms. With the nil-rate bands still frozen at up to £1m for a married couple, even relatively modest estates are at risk.
“It’s vital people review their estate planning now, before these changes fully take effect.”
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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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