Rising Inheritance Tax in the UK

The Inheritance Tax UK receipts have reached a record £4.4 billion in just six months, signalling how more families are being drawn into the IHT net. With property values increasing and tax thresholds remaining frozen, many once-exempt estates now face significant tax bills. HMRC’s data show that IHT has become a primary source of government revenue, raising concerns among families about how to safeguard their wealth for future generations.

 

Why Inheritance Tax Receipts Are Increasing

One of the main reasons behind the surge in Inheritance Tax UK collections is the freeze on the nil-rate band (£325,000) and residence nil-rate band (£175,000). These thresholds have not been adjusted for inflation since 2020, meaning more estates fall into the taxable range each year. Rising property prices, particularly in London and the South East, have pushed many families over these limits, leading to higher tax bills on inherited wealth.

Additionally, more estates are being reported due to improved HMRC data-sharing and enforcement systems, ensuring fewer taxable assets go unreported.

Read HMRC’s official guidance on Inheritance Tax

 

Who Is Most Affected by the IHT Surge

Middle-income families are now among those most affected by the rise in IHT. Previously considered a “tax on the wealthy,” Inheritance Tax in the UK is now affecting ordinary homeowners and retirees whose properties have appreciated in value.

For example, a family home worth £700,000 combined with savings and investments can easily push an estate above the IHT threshold. Without proactive estate planning, families could face tax bills of 40% on the portion exceeding the limit.

 

How Proper Estate Planning Can Help

Despite the alarming numbers, there are several ways to reduce your IHT liability. By using trusts, lifetime gifts, charitable donations, and pension planning, families can structure their estates efficiently. Strategic planning ensures that more of your wealth passes to loved ones rather than being lost to tax.

At Care Accountancy, we specialise in helping individuals and families plan their estates to minimise Inheritance Tax UK exposure. Our expert accountants provide tailored strategies including:

• Establishing family trusts to safeguard assets
• Advising on gifting allowances and exemptions
• Managing property portfolios efficiently
• Structuring wills to optimise IHT reliefs

(Internal link: Explore our Trust and Estate Planning Services)

 

Government’s Perspective and Future Outlook

The UK government continues to benefit from record IHT revenues, viewing it as a reliable source of funding. However, many experts argue that freezing thresholds during times of high inflation unfairly pushes more households into the tax bracket.

With an election on the horizon, potential IHT reforms could become a key political issue. Until any policy changes occur, families must rely on proactive planning and professional guidance to manage their wealth effectively.

See the latest financial news from International Adviser

 

How Care Accountancy Can Help You

At Care Accountancy, we take a proactive approach to estate and tax planning. Whether you want to prepare your will, set up a trust, or understand how to reduce your Inheritance Tax UK liability, our experienced team is here to guide you every step of the way.

We offer:

• Personalised estate planning strategies
• In-depth tax advice on property and inheritance
• Assistance with probate, trusts, and wealth transfer

Let us help you secure your family’s financial future while keeping your tax exposure to a minimum.
Contact us today for expert IHT guidance.

 

Conclusion

The record £4.4bn Inheritance Tax UK collection shows that more families are being caught in the IHT net than ever before. With the proper financial planning and expert advice, you can ensure your wealth is protected for the next generation instead of being lost to unnecessary taxation.

 

Disclaimer

The information on this Blog is for general purposes only on matters of interest. The Company assumes no responsibility for errors or omissions in the content of the Blog. Even if the Company takes every precaution to ensure the Blog’s content is current and accurate, errors can occur. Given the changing nature of laws, rules, and regulations, there may be delays, omissions, or inaccuracies in the information on the Blog. The Company is not responsible for errors, omissions, or results from using this information. The Company reserves the right to make additions, deletions, or modifications to the Blog’s contents without prior notice.

In no event shall the Company be liable for any special, direct, indirect, consequential, or incidental damages or any damages whatsoever, whether in an action of contract, negligence, or another tort, arising out of or in connection with the use of the Blog or the contents of the Blog. The Company does not warrant that the Blog is free of viruses or other harmful components.

Please read our disclaimer policy.