This is £700m higher than the same 10 months last year and continues the upward trajectory over the past two decades.
The main inheritance tax allowance has now been frozen at £325,000 for 15 years, and remains frozen for another five years until 2030, while the £175,000 residence nil-rate band hasn’t changed since 2020.
Experts say these freezes are a form of “stealth tax”, which allows the Government to increase tax-take without a backlash from a headline-grabbing tax hike.
Further policy changes are likely to exacerbate the issues. Restrictions on Agricultural Property Relief and Business Relief from April 2026 could place additional strain on family-owned farms and businesses, while from April 2027, unused pensions will also fall within the scope of inheritance tax.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “IHT might not be the most widespread of taxes, but those caught in its web feel the pinch, especially if it’s a bill they weren’t expecting. High house price growth has been a key factor in dragging families into the net, as are frozen tax thresholds, which will remain in place until at least 2030.
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“The recent announcement that pensions will become liable for inheritance tax will also bring more people into the mix from 2027. However, there are things that can be done to lessen the impact. We expect people will make more use of the gifting allowances available to give to their families while they are still alive. Among the array of allowances available is the £3,000 annual exemption – a limit that has been frozen for decades, as well as the ability to give away as many small gifts of up to £250 to as many people as you wish.
“For those with larger potential liabilities, the ‘gifting out of surplus income’ rules will come in handy. However, they will need to make careful records to demonstrate the gifts are regular and that making them does not disrupt their standard of living.”
Shaun Moore, tax and financial planning expert at Quilter, said: “Despite repeated calls for reform, the Government continues to rely on IHT as a growing source of revenue. Without intervention, the number of families caught in the IHT trap will continue to rise, forcing many to rethink their estate planning strategies.”
