UK Inheritance Tax (IHT) receipts are on course to hit a record high by the end of the 2024/25 tax year, with figures showing that between April 2024 and January 2025, collections have already reached £7 billion – a £700 million increase from the previous year. If this trend continues, IHT revenue could surpass the £7.5 billion milestone set in 2023/24.
Why Are More Families Facing IHT?
Several factors are driving this sharp rise in Inheritance Tax:
- Frozen thresholds: The nil-rate band (£325,000) and residence nil-rate band (£175,000) have been frozen until 2028, meaning that as property values and personal wealth grow, more estates are being pulled into the tax net.
- Changes to pension rules: From 2027, the government plans to include pension pots in IHT calculations, further increasing the tax burden for many families.
- Lack of reform: While there has been speculation about changes to IHT, no cuts or adjustments have been made, leaving more estates exposed to this 40% tax.
Financial experts warn that this trend is unlikely to slow down, caused by government policy, with more families being caught in the IHT trap simply due to frozen thresholds and rising asset values.
How Can You Reduce Your Tax Liability?
With tax burdens continuing to grow, careful planning is essential. Strategies such as gifting assets, setting up trusts, and making full use of tax allowances can help families reduce their IHT exposure. If you’re concerned about how these changes could affect you, seeking expert advice is crucial.
See also:
- Year End Tax Planning Summary 2025
- Estate Planning after the Autumn 2024 Budget
- Passing on the Family Business
For tailored advice on inheritance tax planning, contact our team today to discuss the best approach for your financial future.
