IHT receipts 3.1% up on year as reliefs deadline looms for business owners

Inheritance Tax receipts for April 2025 to December 2025 are £6.6 billion, which is £0.2 billion higher than the same period last year.

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

‘Such gradual increases in the Inheritance Tax take – driven by the fiscal drag effect of rising asset values taking more households’ estates above the frozen nil-rate bands – will be eclipsed in the coming few years by structural changes in IHT reliefs and rules.

‘For business owners looking at potential IHT liabilities and the long-term financial security of their firm and their family, a clear deadline for succession planning is fast approaching.

‘A new cap on agricultural property and business reliefs will come into force on 6 April that means many business owners and their families face a greater IHT bill at death, which in some cases could spell jeopardy for the firm itself. A sudden and unexpectedly large IHT bill, particularly where liquid assets are in short supply, could spell the end for even a successful enterprise and the jobs it provides.

‘Business owners and backers might be distracted by myriad pressures coming from tariff threats, business rates reform, National Insurance increases and minimum wage hikes – but they can still take steps now to mitigate some potentially damaging tax liabilities.

‘Transfers of assets that can be made today with no immediate tax charge will be limited after 6 April, and the use of trusts could play a key role, which means that action must be taken now to address some potentially complex IHT planning and legal issues.

‘We have seen data this month revealing a significant increase in the use of trusts, with the number registered in the 2024/25 tax year amounting to 14.5% of all existing trusts.[1] Some of this will be due to a deadline for the registration of some trusts, relating to anti-money laundering legislation.

‘But we are also seeing an increased interest in trusts among clients since the October 2024 Budget introduced not just these changes to APR/BR but also the inclusion of unspent pension assets from April 2027. As IHT nil-rate bands remain in a long-term freeze (until April 2031) and asset values increase, many more families are being drawn into IHT liabilities – a trend that will be swelled by the IHT reforms which take effect in the next 18 months.

‘That will require more households to seek professional advice if they want to effectively reduce their IHT liability, as best estate planning practice is often far from straightforward.’