IHT receipts £100m up on last year but revenues set to surge as tax net spreads

Monthly figures from HM Revenue & Customs today showed that Inheritance Tax receipts for April 2026 to July 2026 were £3.2 billion, which is £0.1 billion higher than the same period last year.

Ian Dyall, Head of Estate Planning at wealth management firm Evelyn Partners, comments:

‘The growth of inheritance tax receipts has slowed in recent months, probably as a result of moderating property values in London and the South East over the last few years, which will have reduced the value of some estates.

‘But no one should let this lull them into complacency over the potential reach of IHT. We have not yet seen the effects of the restrictions to agricultural property and business reliefs that came in this April.

‘And the scope of IHT will increase dramatically from next April, when unspent pension assets become part of savers’ estates, not least as bullish equity markets have boosted pension pots in recent years. That will mean more families will become subject to IHT and estates that are already facing an IHT bill could be looking at an even greater one. The beneficiaries of those older than 75 are at risk of a super-sized tax burden from next April as they could also pay income tax at their marginal rate when they withdraw funds from the pension, after it’s already been depleted by IHT. That could mean they end up with not much more than a third of the value of the pension left by the saver.

‘Moreover, an ageing population will drive a rise in IHT liabilities in the coming years, as the wealthy boomer generation enters late life, with the OBR recently forecasting that receipts will rise to 1.4 per cent of GDP by 2030/1.

‘That is of course unless people take some action to mitigate an unnecessary tax burden on the estate at death. That could take the form of lifetime gifting or even just spending it on themselves - and possibly leaving other assets for loved ones, such as property. The very useful “normal expenditure out of income” exemption can be put to work with sufficient foresight and care, and many families are looking towards whole of life policies, which can be funded from pensions and written into trust so that they pay outside of the estate an amount that covers the expected remaining IHT bill.

‘The spousal exemption becomes even more valuable after next April, as it is pretty much the only way to ensure a bequeathed pension will not be subject to IHT, on the first death at least. That means not just that pension savers should check their beneficiary nominations, as many will have put down their children under the current regime, a choice that might need rethinking. But also that elderly, long-term co-habiting partners with significant pensions might consider getting married for a big tax saving on the first death – as was widely covered in the media this week after Ricky Gervais revealed he is considering marrying his long-term partner for this very reason.’