After HM Revenue & Customs inheritance tax receipts showed another jump in the first 10 months of the 2025/26 tax year, compared with the previous year, wealth managers discuss the impact and suggest ways of mitigating tax liability.

Latest HM Revenue & Customs (HMRC) inheritance tax (IHT) data shows it reached £7.1 billion ($9.58 billion) in the first 10 months of the 2025/26 tax year, that is £100 million higher than the same period last year, continuing a long-term upward trend in takings.

The lifetime nil-rate band of £325,000 and the residence nil-rate band of £175,000 remain frozen. With property price inflation outpacing these static thresholds, more estates including those of so-called “ordinary” homeowners are being dragged into IHT liability.

Most unused private pensions will be counted as part of an individual’s taxable estate from April 2027, an expansion of what is subject to IHT. Executors will be required to report and pay any tax due on pension assets.

From April 2026, as a result of business and agricultural relief reforms, qualifying assets will be exempt from IHT up to £2.5 million; while any excess over that will be taxed at an effective 20 per cent rate.

The Office for Budget Responsibility forecast that IHT will raise £9.1 billion in the current tax year, with many concerned that the system is unfairly affecting the middle class.

Here are some reactions from wealth managers to the latest data.

Andrew Zanelli, head of technical engagement at Aberdeen Adviser
“Yet again we’ve seen an increase in IHT receipts. This is not surprising, the data has been trending upwards for some time now, and we expect it will surge upwards from April 2027. We are now 13 months away from pensions being brought into the tax’s scope from April 2027 and in our meetings with advisors we’re hearing that this is the number one concern for their clients. Advisors are getting significant numbers of new client enquiries on IHT planning as more people come to realise that they could be impacted. It is possible to manage IHT risk with good planning so it is key that people understand how much they’re worth. Careful and comprehensive planning, supported by expert advice, is critical for managing exposure in a way that still supports overall financial goals.”

Malvee Vaja, chartered financial planner at Rathbones
“Inheritance tax receipts continue to edge higher. The main driver remains frozen thresholds, which are steadily pulling more families into the IHT net as property values and long-term savings rise. For many households, it isn’t deliberate wealth building that creates an inheritance tax bill, but the simple fact that a family home now accounts for most of an estate’s value. Looking ahead, the planned inclusion of unused pension assets from April 2027 will widen the net further, turning what many see as a retirement planning tool into part of the inheritance tax equation.

“For many families, this underlines the importance of estate planning sooner rather than later. Reviewing wills, ownership structures and gifting intentions can make a meaningful difference, but it’s important not to act hastily or give away too much at the expense of future security. Inheritance tax is quietly shifting from a niche concern to a mainstream one, and taking calm, considered advice early can help families avoid difficult decisions later.”

Mike Winstanley, director of wealth management at Bentley Reid
“We have now seen consecutive record-level years for IHT, and the direction of travel is clear. In practice, this is being driven by a prolonged freeze in the nil-rate band and residence nil-rate band, combined with sustained growth in property values and investment portfolios over the past decade. As a result, more families who would not traditionally have considered themselves exposed to IHT are now firmly within scope. For clients, the impact is increasingly material. IHT at 40 per cent is not marginal, it meaningfully alters the intergenerational transfer of wealth. Where an estate sits at £3 to £5 million, the tax liability can comfortably exceed £1 million without structured planning in place.

“The key shift we are seeing is that inheritance tax planning is moving from being a late-stage exercise to something that must be integrated into the wider financial plan earlier. That includes lifetime gifting strategies, appropriate use of trusts, business relief planning where suitable, or sometimes putting in place a straightforward life insurance policy first."

Isaac Stell, investment manager at Wealth Club
“The government has made a pig’s ear of inheritance tax reform. Crackdowns on farmers and business owners proved unpopular and ultimately unworkable, forcing a partial retreat on relief thresholds. But years of frozen allowances, combined with new rules that will bring pensions into the scope of IHT, mean that more ordinary families, not just the wealthy, are being pulled into the tax net. At the same time, HMRC’s tougher enforcement is adding further pressure at what is already a difficult time for bereaved families. With the tax base widening and sharp ‘cliff edges’ in the relief system still in place, proactive planning and accurate reporting have never been more important.

Stell outlines what families and investors can do to mitigate their inheritance tax exposure:

Gifting early and carefully: Gifts from surplus income are immediately exempt; larger gifts fall outside the estate if the donor survives for at least seven years, but risk losing control of those assets.

Business Property Relief (BPR) and qualifying investments: Planning around the £2.5 million full relief allowance and understanding effective tax rates on excess assets is critical.

Alternative investment management (AIM) individual savings account (ISA) and other relief-eligible holdings: While traditional ISAs still form part of the estate for IHT purposes, investing through vehicles that may qualify for relief requires professional risk assessment.

Revisiting pension strategies: With pension IHT changes looming, serious consideration of how death benefits are held and passed on has become imperative."