In April, IHT receipts increased by nearly 100 million pounds, and invoices continue to rise

Families paid £97 million more in inheritance tax than they did a year ago, according to the most recent official figures, as a result of frozen thresholds

According to HMRC data, in April alone, inheritance tax (IHT) payments brought in a total of 780 million to the Treasury, the second-highest monthly total ever.

IHT revenues increased by 97 million over the same month last year, coinciding with the ongoing trend of people falling into the IHT trap due to frozen tax thresholds and rising home prices.

The IHT take set a record of 8.2 billion in 2024 - 2025, and this year's numbers are expected to be even higher.

According to the most recent Office for Budget Responsibility (OBR) forecast on IHT, which was released at the Spring Statement, the tax would generate 9 Point 1 billion for the Treasury in 2025 - 2026, and by the end of the decade, that amount would have increased to over 14 billion.

As of now, the Treasury has seen record inheritance tax receipts for four years in a row, and the April figures indicate a strong start to 2025 - 2026.

As the new tax year begins, the story is largely unchanged, according to Shaun Moore, tax and financial planning specialist at wealth firm Quilter. The government's covert taxation strategy continues to generate steadily increasing amounts of revenue.

Higher taxes on IHT.

As a result of frozen nil-rate bands for IHT, more families are being forced to pay estate taxes. According to recent research, average earners now have to pay £200,000 in inheritance taxes.

The director of retirement specialist Just Group, Stephen Lowe, stated: "The growth in asset prices and the pincer movement of the ongoing freeze on thresholds have been the main drivers of rising IHT receipts to date.

Since the 2009 - 2010 tax year, 325,000 has been the primary IHT nil-rate band, meaning that no IHT is owed.

The residence nil-rate band was introduced in the 2017 - 2018 tax year and applies to the value of the primary residence, up to which no IHT is owed. Beginning at 100,000, it rose by 25,000 annually until 2020 - 2021, when it reached 175,000, where it has remained despite the sharp increase in real estate values.

With the help of these two allowances, each person can give 500,000 to family members without having to pay 40% IHT. Any unused allowance is also passed on to spouses, potentially allowing up to £1 million to be passed on tax-free.

"But more families are being caught by IHT, many without realizing until it's too late," Moore stated, citing the high property prices and the nil-rate bands that will remain frozen until 2030.

This tendency is unlikely to change anytime soon due to upcoming adjustments to business and agricultural assistance starting in 2026 and the addition of unused pensions to estates starting in 2027.

Lowe stated, "More reforms announced at the Autumn Budget, particularly the proposed changes to the treatment of pension death benefits later this decade, are likely to accelerate the inheritance tax haul even further over the coming years."

According to Chancellor Rachel Reeves' announcement in the Autumn Budget of 2024, unused pension savings may be included in an estate for the purposes of IHT as of April 6, 2027. At the moment, beneficiaries of unused pensions usually receive tax-free payments.

Additionally, Reeves declared that it would limit the inheritance tax exemptions available for business and agricultural property starting in April 2026.

According to Lowe, "anyone who is worried that their estate might be subject to IHT should make an updated valuation of their estate, including a recent assessment of their property wealth, to understand if they may be liable to IHT."

"Expert financial guidance is beneficial for many individuals who wish to effectively manage their estate because estate planning is a complicated process.

Gifting is still the best way to protect yourself from IHT if you're worried about it, but you should consider your personal needs first. You could reduce your inheritance tax liability by 37,000 by giving them gifts while you are still alive.

Income tax thresholds have been put on hold.

Additionally, PAYE income tax and national insurance receipts climbed to 47.9 billion in April, a 2.9 billion increase over April 2024.

Pay increases that don't always keep up with inflation are pushing more workers into higher tax rates while income tax thresholds remain frozen.

Prior to April 2021, most personal tax thresholds were set to increase in accordance with CPI inflation; however, since then, they have been frozen in cash terms. As earnings increase in relation to tax thresholds, a larger portion of taxpayers' income is subject to taxes, and a greater proportion of that fall into higher tax bands. We call this fiscal drag.

According to Moore, it's a very successful strategy for increasing Treasury receipts without explicitly raising tax rates. Reeves indicated that the freeze would end in 2028, but whether or not this pledge can be fulfilled will depend on the country's financial situation as the Autumn Budget this year draws near.

Over half of all adults in the UK, or nearly 32 million people, may be forced into a higher tax bracket or begin paying income tax for the first time as a result of the five-year income tax threshold freeze. Find out what to do if you are placed in a higher tax bracket due to frozen tax brackets.

Are there going to be any more tax increases?

Experts worry some of them may appear in the Autumn Budget as information about a memo that deputy prime minister Angela Rayner sent to Chancellor Rachel Reeves, proposing a 4 billion tax raid on investors and savers, comes to light.

According to reports, the memo contained a wide range of possible revenue-raising strategies, including raising the corporation tax rate for banks, reducing dividend tax breaks, and restoring the pension lifetime allowance.

Moore stated that the Treasury's desire for revenue might not yet be met, based on leaked proposals from Labour this week.

He said, "It is evident that the UK's tax landscape is changing swiftly and may become more punitive, especially when combined with rumors that the additional rate income tax threshold may stay frozen past 2028."

Careful tax and financial planning is more crucial than ever for households that are already struggling due to the compounding effect of frozen thresholds and decreasing reliefs.