UK Inheritance Tax Receipts Continue Upward Trend

HM Revenue & Customs has reported a further increase in inheritance tax (IHT) receipts, highlighting continued growth in government revenues from estates.

Between April 2025 and February 2026, IHT collected rose to £7.7 billion, an increase of £100 million compared to the same period a year earlier. The data underline how long-standing fiscal policies and climbing asset values have continued to expand the number of estates subject to inheritance tax.

The trend raises questions about the broader implications for future government finances and households engaged in wealth planning.

HMRC Reports Increase in IHT Receipts

The official figures from HMRC indicate that IHT receipts reached £7.7 billion for the period April 2025 to February 2026. This is £0.1 billion higher than receipts for the same period in the previous financial year.

The increase, although modest, reflects a longer-term pattern of rising inheritance tax revenues for the Treasury. While the year-on-year rate of growth in receipts has slowed, the data suggest overall upward pressure remains.

Amendments to tax rates have not contributed to the increase; rather, unadjusted thresholds and growing asset values have played a significant role.

Contributing Factors and Fiscal Policy

IHT thresholds, including the nil rate band, have remained unchanged for several years. As the values of assets such as property and investments have increased, more estates are being brought into the scope of inheritance tax.

Experts note that the phenomenon is largely the result of 'fiscal drag,' where fixed thresholds begin to catch more taxpayers as asset values rise. Freezing allowances while property and investment values increase has incrementally widened the tax net.

Impact of Asset Values on Tax Liabilities

Property inflation has been a particular driver of larger estates falling above the IHT threshold. Ian Dyal, head of estate planning at Evelyn Partners, said the recent figures are anticipated due to these sustained trends.

He explained, 'The expansion of IHT is not a result of sudden shifts in wealth, but rather years of fiscal drag. Nil rate bands have been frozen for many years while asset values, particularly property, have continued to inflate.'

Families inheriting estates may now face tax bills that would once have been avoided. Rising asset values mean that households previously unaffected by inheritance tax may now find themselves liable.

Evolving Wealth Planning Strategies

As a consequence, advisers have noticed a shift in client concerns and strategies. Dyal noted, 'From a planning perspective, more estates that would once have been considered comfortably below the IHT threshold are now creeping into taxable territory.'

He advised that ongoing review of estate plans has become increasingly important for families with growing property and investment portfolios.

The importance of early estate planning is being stressed by advisers, who see the current policy landscape as a driver for reassessing strategies around inheritance and intergenerational wealth transfer.

Implications for Financial Advisers and Families

The persistence of higher IHT receipts has reshaped how advisers approach asset drawdown and inheritance strategies. Will Hale, chief executive of Key Equity Release, said,

'Today's HMRC data reinforces the role inheritance tax plays as one of the government’s most under the radar but dependable revenue raisers.'

Aggregate taxation levels have prompted families to consider a wider range of wealth management options, including the role of the family home in retirement planning and inheritance scenarios.