HMRC have collected almost £0.8bn in the space of a month through inheritance tax (IHT) receipts – and the expectation is of this continuing to rise, as more families are pulled into scope for paying the tax due to frozen thresholds and regulation changes.
The £780m collected in the first month of the new financial year is the second-highest monthly total ever recorded, with OBR forecasts predicting IHT will raise more than £9bn for the Treasury across 2025/26.
Industry experts are warning families to ensure they know the state of their estates ahead of time to allow for inheritance planning, with pensions also due to fall within these tax considerations from 2027 onwards – pulling more into this sphere of taxpayers at a moment which will already be difficult.
“IHT receipts are only going in one direction and that’s up,” Andrew Zanelli, head of technical engagement at Aberdeen Adviser, said. “The government’s plans to bring pensions into the tax’s scope from April 2027 is one of the reasons for the continued rise and we’re still waiting for the details which is making many people understandably concerned.
“But there’s also a large amount of people who still don’t realise their estate will be taxed on death, and we see in the data that the number of estates where tax is due is concentrated in the smaller estates.
“Knowing exactly how much you’re worth and good planning is key because it is possible to manage IHT risk. Careful and comprehensive planning, supported by expert advice, is critical for managing exposure in a way that still supports overall financial goals.”
There could be additional changes on the way, too.
Shares held in companies listed on the Alternative Investment Market (AIM) are currently exempt from inheritance tax, but proposals have suggested this could be slashed by 50 per cent – or removed altogether.
“Over the last 20 years the inheritance tax tab has increased from £3.3bn to £8.2bn. With such a strong start to the 2025/26 tax year this is only going one way – and that is up,” said Nicholas Hyett, investment manager at Wealth Club. “This is no accident – leaked government documents made it clear this week that inheritance tax is still seen as a cash cow by some members of the cabinet.”
In addition to the inheritance tax windfall, changes to employers National Insurance contributions helped to boost the Treasury by £1.7bn in April. Meanwhile, while borrowing came in at £20.2bn – £1bn more than last April – debt interest was £0.5bn lower than April 2024 as a result of lowered interest rates.
