As loved ones pay an additional £134 million, the inheritance tax rate increases once more

More families are being forced to pay inheritance tax as a result of asset prices being at or close to all-time highs and tax thresholds being frozen

As the Treasury's tax revenue continues to rise due to frozen thresholds, inheritance tax revenues have increased once more.

According to the most recent HMRC statistics, the government received 2.22 billion in inheritance tax (IHT) revenue from April to June 2025. This represents an extra 134 million over the same time frame in 2024.

When compared to the same period last year, which was a record one, inheritance tax revenues for this fiscal year are currently six percent higher.

In 2025 - 2026, IHT is expected to generate 9.1 billion for the Treasury, setting another record year, according to the Office for Budget Responsibility's most recent forecast, which was released at the Spring Statement. Over £14 billion is anticipated to be raised by revenues in the fiscal year 2029 - 2030.

"The trend of more families and more assets attracting IHT liabilities is set to continue as nil rate bands remain frozen," stated Ian Dyall, head of estate planning at wealth management firm Evelyn Partners, despite the relative softness in the real estate market indicated by recent house price indices.

Frozen thresholds for inheritance taxes.

Dyall noted that while the threshold for the main residence nil rate band of inheritance tax has remained at 175,000 since April 2020 and the threshold for the main nil rate band of inheritance tax has been stuck at 325,000 since 2009, property prices and equity valuations are still at or close to all-time highs.

When business and agricultural property relief are reduced starting in April of next year, and unspent pension funds are subject to IHT calculations starting in April of 2027, the Treasury will be hoping for more inheritance tax revenue in addition to the boost to IHT receipts that comes from the fiscal drag of frozen allowances.

"IHT liabilities are expected to increase significantly throughout the United Kingdom, not just in the South East, where they are typically concentrated," Dyall stated.

Ways to lower the inheritance tax.

Nonetheless, households can take steps to evade inheritance taxes. To hopefully lower their IHT bill, they could use their yearly gifting allowances, take money out of their pensions to spend or give, or make larger lump-sum gifts.

According to Dyall, many people may need to review their wills and death benefit designations in order to comply with the upcoming changes to inheritance tax laws.

He added that some people may still believe it is worthwhile to write whole life insurance policies into trust in order to protect their beneficiaries from an increasing inheritance tax burden.

"Families shouldn't do anything because the budget reforms change the rules of estate planning, and they shouldn't take drastic measures themselves without professional advice," Dyall stated.

"Expert advice in the area of estate planning can help keep a larger percentage of assets in the family while also avoiding expensive errors.

An updated estate valuation, including a recent assessment of property wealth, should be obtained by anyone who is unsure or worried that their estate might be subject to inheritance tax.