The latest HMRC data shows inheritance tax receipts of £7.1 billion in the first ten months of the 2025 to 2026 tax year. Annual totals have risen consistently in recent years and continue to reach record levels.
Inheritance tax is charged at 40% on the value of an estate above the available nil-rate bands. The core nil-rate band remains at £325,000. The residence nil-rate band is also fixed in cash terms.
Over the same period, residential property values and investment assets have increased. As asset values rise while thresholds remain fixed, more estates exceed the available allowances. The taxable base expands and receipts increase.
For many estates, liability arises from a primary residence combined with savings and pension assets. In higher-value regions, one property can absorb most of the available tax-free bands. A broader range of households now falls within scope.
Why IHT Receipts Are Increasing
Frozen thresholds combined with asset growth widen the inheritance tax base. Inflation and sustained property appreciation reinforce that effect. Estates that would previously have fallen below the threshold now exceed it.
Longer life expectancy also contributes to larger estates at the point of death. Assets accumulate over extended periods. HMRC scrutiny of valuations and relief claims has also increased, particularly in relation to business and property assets.
Each year, a greater proportion of estates becomes taxable. The rise in receipts reflects that gradual expansion.
Upcoming Changes Affecting Estate Values
From April 2026, reforms to business property relief and agricultural property relief are expected to adjust the availability of full relief in certain cases. Estates that rely on these reliefs should review their position once the final legislative detail is confirmed.
From April 2027, pension benefits are expected to fall more fully within the inheritance tax framework. Defined contribution pension funds have often sat outside the taxable estate. Bringing pension wealth into scope will affect overall estate valuations and succession planning.
These developments alter the range of assets subject to inheritance tax.
What Taxpayers Should Review
Rising receipts and legislative reform mean estate values should be recalculated periodically. Taxpayers should assess the current gross value of their estate, apply the nil-rate bands accurately and review how business assets and pensions are treated under the forthcoming rules.
Inheritance tax now applies to a growing proportion of estates. Regular review of ownership structures, relief eligibility and succession plans provides clarity on potential exposure and future liability.
Author
Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.
Gill is a Multiple Business Owner and the Managing Director of Prof Services Limited - a Marketing & Content Agency for the Professional Services Sector.
