Inheritance Tax Exceeds £500k for Nearly 10% Estates UK

Inheritance tax (IHT) receipts in the UK are rising significantly due to frozen tax thresholds and increasing asset values, with government income from IHT up 6% for April to June 2025 compared to the previous year. More than 2,500 estates paid IHT bills exceeding £500,000 in the 2021/22 tax year, representing a 29% increase from 2018/19, and projections estimate over 3,500 estates will face such large bills by 2025/26. The nil-rate band has been frozen at £325,000 since 2009 and the residence nil-rate band at £175,000 since 2017, causing fiscal drag that pulls more estates into the IHT net as property and asset values rise. The upcoming inclusion of pension assets in IHT calculations from April 2027 is expected to further increase the tax burden, pushing more estates into higher tax brackets and prompting many to reduce pension contributions. Experts warn that without proactive financial planning, many families will face unexpected large IHT bills, with the impact extending beyond traditionally affected regions. The Treasury anticipates further increased revenues from IHT due to these changes and expects receipts to reach record levels over the coming years.