Although it is a detested tax, inheritance tax certainly keeps the revenue flowing into the Treasury as thresholds remain unchanged. The scope of this tax is due to widen, affecting businesses and family-owned farms over a certain size, and unused pension pots.

Whatever else can be said about the UK’s Autumn Budget, the relentless upward revenue “take” from inheritance tax (IHT) suggests that it is unlikely that this often-resented tax will be ended soon.

Fresh data provides evidence that the amount raised from IHT is continuing to increase. Receipts reached £5.8 billion ($7.75 billion) in the first eight months of the 2025/26 tax year. (Source HM Revenue & Customs.) That’s £84 million higher than the same period last year, continuing a steady grind higher for more than two decades, with tax bands frozen while asset values have increased – the “fiscal drag” impact.

Earlier this year the Office for Budget Responsibility, the group advising the UK government on the state of public finances, forecast that IHT would raise £9.1 billion this 2025/26 tax year. IHT thresholds are frozen and will remain so until at least April 2031. The “nil rate” band is set at £325,000, with amounts over that level liable to 40 per cent tax.

Other figures show that with capital gains tax (CGT), there was a modest 4 per cent rise in revenues for April to November this year, at £1,583 million.

“The Budget confirmed that inheritance tax is already one of the government’s most dependable revenue raisers,” Isaac Stell, investment manager at Wealth Club, said in a note. “At the start of this parliament IHT brought in £8.3 billion a year and by 2030/31 that figure is forecast to rise to £14.5 billion – an extraordinary increase driven largely by frozen thresholds and a stealthy approach to raising revenues without major announcements that cause a stir. This confirms that the inheritance tax rules in place are already doing their job as one of the Treasury’s quietest – and most reliable – revenue raisers.”

In the first of her budgets, in 2024, finance minister Rachel Reeves controversially removed IHT reliefs for agricultural and business property at £1 million or more, provoking anger from the farming industry, for example, fearful that family-run farms will be broken up. The £1 million level will be frozen until April 2031. However, the government has said that the £1 million allowance will now be transferable between spouses and civil partners.

The IHT net has also widened to pensions: From 6 April 2027, unspent pension pots will be brought within the scope of the tax, ending their long-standing role as a planning tool.

“Taken together, these measures show a government that is still squeezing more revenue out of inheritance tax but is running out of subtle ways to do it,” Stell said. “Freezes, restrictions and quiet extensions in the form of fiscal drag can only go so far. There is only so much more that can be raised through this way. That reality applies well beyond IHT. At some point, if the government wants more money, it will have to be honest with voters and raise taxes openly and in doing so run the risk of losing votes in the next election.”

Simon Martin, head of UK technical services at Utmost Wealth Solutions, said: “Inheritance tax looks set to remain an increasingly important and reliable source of revenue for the Treasury for the foreseeable future.”

(See wealth managers' reactions to the Budget). 

Editor's note: As far as this news service viewed it, the wealth management industry, which tends to be relatively neutral in its language, was generally angry about the direction of policy – with some exceptions. There are worries that Reeves’ tax hikes on dividends, for example, will hurt small firms, or that higher income tax burdens via freezing thresholds will stifle work and enterprise. In the background is a worry that the UK is suffering from weak growth, low real investment, sticky inflation and weak productivity. Unless these problems are resolved, the country will fall into a “doom-loop” of deteriorating public finances, calls for higher tax, and sluggish growth.