Inheritance tax (IHT) receipts are on track to hit record levels in 2025, as frozen thresholds and rising asset values push more households into the net, official figures show.
HMRC data released yesterday reveals that IHT brought in £3.1 billion between April and July, £200 million more than in the same period last year.
Over the past five years, receipts from the levy have surged by more than 50 per cent, with 2025 set to deliver the highest annual total yet.
Income tax receipts also jumped sharply in July, driven by self-assessment deadlines and the Treasury’s decision to freeze thresholds. Gross tax and National Insurance contributions for the April–July period reached £301.7 billion, £19.9 billion higher than a year ago.
STRAINED FINANCES
The boost offers some relief to the government’s strained finances, though analysts cautioned a substantial fiscal gap remains.
By contrast, capital gains tax receipts fell to £165 million in July, down on the same month last year, underlining patchier contributions across the tax base.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, says the latest IHT figures highlight how the tax has become “unrelenting” for many families.
And she adds: “We are only part of the way through the year, but it already looks likely we are in for another record year for this most unpopular of taxes.”
Morrissey also warns that many households could be caught unawares by rapid house price growth and recent policy changes, including the decision to bring pensions within the scope of IHT.
She says: “Couples have the potential to pass on up to £1 million to their children or grandchildren free of inheritance tax. However, cohabiting couples who do not benefit from the same exemptions could face a looming bill they know nothing about.”
DEATH FOCUS
Will Hale, chief executive of later life lending specialists Key Advice & Air, says the figures showed how “the government is looking at death as a key focus for boosting public finances”.
He adds: “Many people who would fall beneath the traditional definition of ‘high-net worth’ are now sleep-walking into a situation where their estates will be subject to significant IHT charges.
“It is therefore imperative that families seek specialist advice and that this advice includes consideration of all options – including modern later life lending solutions such as lifetime mortgages.”
