The government’s inheritance tax take continues to rise rapidly and is up £800m on last year to £7.6bn, according to latest government data out today.

Fiscal drag is pulling more estates into the IHT net and also increasing tax receipts for the government in many other areas.

Rising tax receipts include:

• IHT up £800m year on year (in the period April 2024 to February 2025) to £7.6bn.

• Insurance Premium Tax bringing in £1.3bn in February, pushing up 11-month total for the 2024/25 financial year to £8.8bn.

• Capital Gains Tax bringing in £13bn for the past year, only slightly down on the £14.5bn raised in the previous year.

• PAYE Income Tax and NIC receipts for April 2024 to February 2025 at £384.9bn - £12.6bn higher than the same period the previous year.

Shaun Moore, tax and Financial Planning expert at Quilter, said: “The steady rise in IHT receipts has become an inescapable feature of the tax system.

“With the nil-rate band (£325,000) and residence nil-rate band (£175,000) frozen until 2030, the government has ensured that more estates are pulled into paying this deeply unpopular tax. Rising property prices, particularly in the South East, are compounding the issue, leaving many families unexpectedly liable for a 40% tax charge on inherited wealth.

“Further policy changes will only exacerbate the issues. Restrictions on Agricultural Property Relief and Business Relief from April 2026 could place additional strain on family-owned farms and businesses, while from April 2027, unused pensions will also fall within the scope of IHT. What was once a tax on the wealthiest estates is increasingly burdening middle-income families with no obvious route for mitigation.

Ian Dyall, head of estate planning at wealth management firm Evelyn Partners, said: “With one month of the financial year’s tax receipts to go, inheritance tax revenues are on course to exceed last year’s total by nearly 12%, driven by the engine of fiscal drag. 

“Property and investment assets continue to grow in money terms so that more modest estates in real terms are exceeding the frozen nil-rate bands, and those nil-rate bands start to look less meaningful for larger estates, protecting an ever-smaller proportion of them against IHT.  

"Further moves on taxation at next Wednesday’s Spring Statement are unlikely, not least because most of the tax measures announced at the Autumn Budget have yet to take effect or be confirmed in law.”

Helen Morrissey, head of retirement analysis, Hargreaves Lansdown, said: “Inheritance tax has hit a new record. Taxpayers have handed over an eye-watering £7.6bn for the year so far – overtaking the record sum paid during the whole of the previous tax year.

“IHT might not be the most widespread of taxes, but those caught in its web feel the pinch, especially if it’s a bill they weren’t expecting. “

Nicholas Hyett, investment manager at the HNW-focused Wealth Club, said: “Inheritance tax continues to be a meal ticket for HMRC. It may only affect a small percentage of estates, but that number is growing. OBR estimates suggest nearly 10% of estates will pay death duties by 2030 due to increasing house prices, changes to inheritance tax rules and years of allowance freezes.

Stephen Lowe, director at retirement specialist Just Group, said: “Another year, another record-busting Inheritance Tax haul for the Treasury – that’s four consecutive years of all-time highs.

“Frozen thresholds and rising property prices have been the predominant forces behind this increase to date but changes announced at the Autumn Budget, which will be implemented from April 2026, look set to bring in even greater amounts over the remainder of the decade and beyond.

“The removal of pension death benefits from Inheritance Tax will come into force from 2027 and is likely to inflate receipts for the Chancellor even more."