Stephen Lowe, group communications director at retirement specialist Just Group, commented: “The latest IHT receipts data for January will be a welcome boost for the Treasury, with the 2024/25 tax year looking almost sure to scoop another all-time record level of IHT revenues. Frozen thresholds and rising asset prices continue to be the main driver of the current record tax take. The Chancellor’s Autumn Budget revisions to the IHT regime resulted in the OBR predicting that approximately one in 10 deaths will incur IHT by 2029-30, double the proportion in 2023-24, meaning that within a decade roughly twice as many estates will be hit by IHT. We would encourage people to regularly assess the value of their estate, including up-to-date property valuations, to understand whether they could be affected by IHT. Estate planning can be complex, and seeking professional financial advice can help individuals navigate the rules, mitigate potential liabilities, and ensure they pass on as much wealth as possible to their loved ones."
Helen Morrissey, head of retirement analysis, Hargreaves Lansdown: “The inheritance tax creep crawls ever higher, hitting £7bn so far this tax year. This puts it well on track to surpass the £7.5bn record that it hit a year earlier. With government plans to include pensions in the net for inheritance tax from 2027 and thresholds remaining frozen, the tax take is only going to get higher. However, there are things you can do to try and reduce an inheritance tax bill, and we expect people will start to take action sooner rather than later. Gifts of any size fall out of your estate after seven years so we can expect to see people start to gift assets to loved ones now so they can start the countdown ticking. We will also likely see people start to use the various gifting allowances available – such as the £3,000 annual exemption – to reduce the size of their estate. Gifting out of excess income will also prove popular. However, its really important that detailed records are kept as gifts need to be proved to be made regularly and out of your surplus income to meet the rules. You also should not reduce your own standard of living to maintain these gifts – this is a really important point as you don’t want to be in a position of needing to ask for gifted money back because you can no longer afford to give it.”
Shaun Moore, tax and financial planning expert at Quilter: “HMRC’s latest figures show that inheritance tax receipts for the period of April 2024 to January 2025 are £7.0 billion, up by £0.7 billion compared to the same period last year. This relentless rise in inheritance tax receipts is baked into government policy. With the nil-rate band (£325,000) and residence nil-rate band (£175,000) frozen until 2030, more and more families are being dragged into paying the tax. Rising house prices, particularly in the South East, mean many people that don’t consider themselves to be wealthy will now find themselves above the threshold and facing a 40% tax bill. Farmers and business owners are also feeling the pressure. The upcoming reforms to Agricultural Property Relief and Business Relief could force more family farms and small enterprises into difficult decisions about their futures. A tax once aimed at the wealthiest estates is now creeping further into the middle class, and with unspent pensions set to be taxed from April 2027, the government’s IHT windfall is only set to grow. Inheritance tax remains one of the most resented taxes in the UK, yet the government is changing policy so more people than ever will pay it. Without reform, families will continue to find themselves hit with unexpected tax bills on what they hoped to pass down.
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