After HM Revenue and Customs latest figures show another rise in inheritance tax receipts, wealth managers react and discuss ways to mitigate the tax.

HM Revenue and Customs (HMRC) figures show that inheritance tax (IHT) receipts recorded a total of £780 million ($1,053 million) in April 2025 – the first month of the new financial year (2025/2026) – the second highest monthly total ever recorded.

It marks an increase of £97 million in IHT revenues compared with the same month last year (2024/2025), continuing the upward trend seen over the last two decades. The 2024/2025 year saw a record IHT take of £8.2 billion and predictions that inheritance tax receipts will top that are looking increasingly realistic. 

The latest Office for Budget Responsibility (OBR) forecast on IHT made at the UK government’s Spring Statement estimated that the tax would raise £9.1 billion for the Treasury in 2025/26, with this figure increasing to more than £14 billion by the end of the decade.

The receipts are continuing to climb, driven in large part by frozen nil-rate band thresholds and rising asset prices, continuing the upward trend seen over the last two decades. The OBR estimates suggest that nearly 10 per cent of estates will pay death duties by 2030 due to increasing house prices, changes to inheritance tax rules and years of allowance freezes.

Nicholas Hyett, investment manager at Wealth Club
“Over the last 20 years the inheritance tax tab has increased from £3.3 billion to £8.2 billion. With such a strong start to the 2025/26 tax year this is only going one way – and that is up. This is no accident – leaked government documents made it clear this week that inheritance tax is still seen as a cash cow by some members of the cabinet.

“The government’s raids on historically IHT-free investments and assets – such as pensions, private company shares and Alternative Investment Market (AIM) shares – create exactly the kind of uncertainty that puts people off making investments. The attack on the AIM market has been particularly egregious where uncertainty is concerned. The market is designed to help UK smaller businesses raise money, funding growth and investment. To encourage investors to take on the substantial risks associated with investing directly into individual small companies; the government has historically treated them as private companies for inheritance tax purposes – meaning that no inheritance tax was due.

“After much speculation that the government would scrap IHT relief on AIM shares altogether, the relief was cut by 50 per cent. This is far from good news for UK companies looking to raise money but at least it dealt with the uncertainty. Money could start flowing into AIM again knowing what the new regime looked like.

“It has emerged that the Deputy Prime Minister has been pushing for IHT relief on AIM to be abolished altogether – even after the 50 per cent relief was announced. This is terrible news for AIM. The limited 50 per cent is back in question, investments will dry up as a result and it will be even harder for small UK companies to raise money.

“The FTSE AIM All Share has fallen more than 8 per cent in the last five years. It needs certainty about the future of tax treatment, or it will wither and die. It’s hard to understand how a government that’s supposedly all about growth looks set to casually kill the UK’s growth stock market.”

Wealth Club outlines below ways investors can mitigate their inheritance tax bill:

Giving money away early. Gifts taken out of regular income, which are not deemed to affect the giver’s standard of living, are inheritance tax free on day one – as are certain smaller gifts. Timing is key as you can give unlimited amounts away but typically these take seven years to be completely inheritance tax free. Of course, once you give away the money you’ve lost control. If you need it back for an emergency, that’s not an option.

Investing in unlisted companies that qualify for Business Property Relief. These are typically inheritance tax free after two years. Investing in unquoted businesses can be risky, however, unlike giving the money away, you retain control. From 2026 you will have an overall £1 million Business Relief Allowance. Anything in addition will be taxed at half the normal rate or 20 per cent.

Investing in an AIM ISA. Individual Savings Accounts (ISAs) are not inheritance tax free. When you pass away, your loved ones could miss out on 40 per cent of your hard-earned cash. AIM ISAs are a popular, although much riskier way, to reduce this. Currently AIM shares could be IHT free after two years. From 2026 the IHT will be halved to a rate of 20 per cent.

Other reactions from wealth managers to the figures:

Simon Martin, head of UK technical services at Utmost Wealth Solutions
“The 2024/25 tax year was the fourth-consecutive record-breaking year for inheritance tax receipts and April’s figures show no signs of this momentum slowing down. The growth in IHT receipts, and forecasted tax-take acceleration from the OBR, will be welcome news for the Chancellor. It doesn’t appear yet that the widely documented outflows of non-doms and high net worth individuals from the UK, following the measures announced in the Autumn 2024 Budget, have caused a dent in these receipts.

“With thresholds frozen and asset prices continuing to climb, more estates are likely to need to consider whether they will be impacted by inheritance tax over the coming years and plan accordingly. We are seeing significant demand for advice in the wake of these changes and that is likely to remain high as individuals look to adapt their succession and estate planning strategies.”

Tim Snaith, partner at Winckworth Sherwood 
“IHT revenues continue to steadily rise due to the prolonged freeze on IHT thresholds. The nil-rate band (NRB) and the residence nil-rate band (RNRB) have not been adjusted for inflation or rising property values, which means that more estates are becoming liable for the tax as asset values increase. It remains a persistent and unavoidable inheritance tax planning issue, and one that should not be ignored. To avoid unexpected financial burdens, it is crucial for individuals to regularly review their wills and estate planning, with professional legal advice, to manage their wealth efficiently.”

Jamie Morrison, head of private client at HW Fisher
"We are now six months on from the Chancellor’s decision to freeze IHT thresholds until 2030, a move that continues to bring more families within the scope of the tax, this upward trend in receipts is expected to continue in the coming years. However, MPs from the Environment, Food and Rural Affairs (Efra) Committee last week urged the government to delay planned changes to farm inheritance tax by a year, warning that the reforms could harm small family-run farms. Calls for a delay will be welcomed by family-run farms, as it would give them more time to seek professional advice and plan ahead to minimise the impact of the changes.

“Currently, pension funds are typically excluded from an estate for inheritance tax purposes, but from April 2027 onwards, unused pension death benefits will be included as part of the estate for IHT. This change will mark a significant shift in many people's tax planning strategies. Those affected by the various inheritance tax changes will probably have to wait until the Autumn Statement later this year for any updates – leaving many UK families uncertain about the future.”

Andrew Zanelli, head of technical engagement at Aberdeen Adviser
“IHT receipts are only going in one direction and that’s up. The government’s plans to bring pensions into the tax’s scope from April 2027 is one of the reasons for the continued rise and we’re still waiting for the details which is making many people understandably concerned and in turn; advisors are busy fielding queries. But there’s also a large amount of people who still don’t realise that their estate will be taxed on death, and we see in the data that the number of estates where tax is due is concentrated in the smaller estates. Knowing exactly how much you are worth and good planning are key because it is possible to manage IHT risk. Careful and comprehensive planning, supported by expert advice, is critical for managing exposure in a way that still supports overall financial goals.”

Ian Dyall, head of estate planning at wealth management firm Evelyn Partners
“The 2025/26 financial year opens where the previous one left off, with a predictable and substantial annual rise in inheritance tax receipts. Estimates last month revealed that IHT receipts for the 2024/25 financial year were 10.8 per cent up on the previous one, and there’s nothing to suggest that the current one will be any different. What has stirred up some interest in the Government’s intentions for IHT – aside from those announced at the October Budget – is the memo from the deputy Prime Minister to the Chancellor leaked this week.

“That called for – among other tax rises – IHT relief on AIM shares to be removed altogether, which would go further than the current cut to 50 per cent due for April 2026, and would save the Treasury £1 billion. Whether this suggestion carries any weight with the Chancellor is unknown, but with the Prime Minister also rowing back on cuts to the Winter Fuel Allowance this week, questions are bound to arise around tax if the fiscal outlook doesn’t improve before the Autumn Budget. Some in Government obviously see the passing on of estates as a legitimate target for tightening up the tax net, so whether or not there are any changes to IHT reliefs at the next Budget, it would be surprising if we got to the next election without any.”