Inheritance tax (IHT) receipts have surged to a new annual record, with figures from April 2024 to February 2025 reaching £7.6 billion, according to the latest data from HM Revenue & Customs (HMRC).
This marks an increase of £800 million compared with the same period last year, surpassing the previous full-year record of £7.499 billion.
And with asset values continuing to rise and fiscal policy unchanged, IHT receipts could remain on an upward trajectory in the years ahead.
The rise in IHT receipts is attributed to a combination of factors, including higher volumes of wealth transfers following recent liable deaths, increased asset values and the government’s decision to freeze tax-free thresholds at 2020-21 levels until at least 2029-30.
NEW RECORD
Specific months – June 2022, November 2022, June 2023, October 2023, September 2024, and October 2024 – saw particularly high receipts, which HMRC has linked to a small number of unusually large payments.
Helen Morrissey, Head of Retirement Analysis at Hargreaves Lansdown, says: “Inheritance tax has hit a new record, with taxpayers handing over an eye-watering £7.6 billion so far this year – overtaking the total paid in the entire previous tax year.”
While IHT affects a relatively small proportion of estates, its impact is increasingly being felt, particularly among those who may not have anticipated the liability.
Morrissey adds: “High house price growth has played a significant role in pulling more families into the IHT net, alongside the frozen tax thresholds. From 2027, the inclusion of pension funds in IHT calculations will also widen its reach.”
Individuals can take steps to mitigate the burden.
However, individuals can take steps to mitigate the burden.
Morrissey says: “We expect more people to take advantage of gifting allowances to pass on wealth while they are still alive. The £3,000 annual exemption has remained unchanged for decades, but individuals can also make multiple gifts of up to £250 to different recipients.
“For those with substantial estates, the ‘gifting out of surplus income’ rules may offer an effective strategy, provided records are kept to demonstrate that the gifts are regular and do not compromise their standard of living.”
The latest figures come amid growing debate over the future of IHT, with some calling for reform or abolition, particularly as frozen thresholds continue to pull more estates into the tax net.
