The growth in Inheritance Tax (IHT) receipts has begun to slow, according to the latest data released today by HMRC.
IHT receipts were £6.6bn for the first nine months of 2025/26, an increase of 4% (£232m) compared to the same period in the previous year.
Despite a slowdown in the rate of growth, IHT receipts are still on track to exceed last year’s total of £8.2bn for a fifth consecutive annual record.
IHT receipts have been rising strongly due to the freeze in the nil rate band at £325,000 since 2009. The band is frozen until at least April 2031.
David Cooper, director at Just Group, said advisers should be on the lookout for further IHT changes from the Government as they look to boost IHT revenues.
He said: “Inheritance Tax has been a powerful revenue generator for the Treasury following four consecutive years of record tax takes thanks to frozen thresholds and rising asset prices.
“While the tax is just about on track to clock up a fifth consecutive annual high and meet the OBR’s estimate, there are signs that the rate of increase has flattened this year. The Treasury will be banking on the policies announced at the Autumn Budget 2024 to provide fresh momentum to meet the 67% increase in revenue forecast over the next five years.”
Simon Martin, head of UK technical services at Utmost, said changes in the housing market could slow further IHT growth.
He said: “Despite a slowdown in the rate of growth, Inheritance Tax receipts are on course for another record-breaking year underpinned by resilient property prices and asset inflation. However, we may see behavioural shifts in the housing market as a result of the ‘Mansion Tax’ set to come into force from April 2028, which could yet temper the pace of future growth.”
Ian Dyall, head of estate planning at wealth manager Evelyn Partners, expects the dip in IHT receipt growth to be temporary.
He said: “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.”
He added that Evelyn Partners had seen an increasing interest in trusts among clients as an IHT management tool.