Inheritance tax receipts have hit a new high as frozen thresholds and rising property values drag more households into the tax net.

Inheritance tax (IHT) receipts have hit £3.8bn so far this financial year, surpassing the £3.7bn recorded at the same point last year, according to the latest data from HMRC.

Total receipts reached £8.5bn in the 2025/26 financial year.

The rise in inheritance tax revenue comes as frozen tax thresholds pull more people into higher tax bands, while assets including houses and investments continue to rise in value.

The nil-rate band has remained at £325,000 since 2009, while house prices have steadily climbed, particularly in the South East. Average house prices in the region hit £381,000 last month, while London prices reached £554,000.

The average UK house price increased by 1.4 per cent in August, according to the latest Land Registry data.

Amit Joshi, managing director of wealth at Mattioli Woods, said: “Rising property values and inflation are turning what was once a tax for the wealthy into a bill for ordinary households. 

“Estates that would have paid nothing a decade ago are now automatically liable, without a single announcement.”

Sarah Coles, head of personal finance at AJ Bell, said frozen bands are “cutting deeper” in the face of higher house prices, meaning many Brits can no longer “escape this much-hated tax”.

Pensions shake-up

According to analysis from the Tax Policy Associates, less than five per cent of estates pay inheritance tax, but this is expected to grow in the next financial year as pensions are pulled into its scope for the first time.

From April 2027, unused funds and death benefits will count towards the value of a person’s estate for tax purposes.

The overhaul of the long-standing IHT exemption for defined contribution pots, combined with frozen tax thresholds which have dragged more-middle earners into higher bands, means thousands of additional estates are set to be charged.

Findings from Tax Policy Associates indicates that by April 2027, 20 per cent of pensioner households will hold enough assets to be exposed to an inheritance tax liability.

Nick Henshaw, head of intermediaries distribution at Wesleyan, said: “A further rise in inheritance tax receipts reinforces the longer-term direction of travel. 

“Frozen thresholds, significant wealth tied up in property and forthcoming changes to pensions all mean that inheritance tax is now a reality for many who have never had to consider it before.”

Monthly dip and Budget questions

While receipts fell month on month, dropping to £598m in August from £658m in July, Lee Quinn, a financial planner at Titan Wealth Planning, warned it would be a “mistake to read too much into one set of figures”.

“Monthly receipts can fluctuate. The longer-term direction for inheritance tax remains an important concern for families,” said Quinn

“The upcoming Budget adds another layer of uncertainty, and some people may understandably be tempted to wait and see whether the Chancellor announces further changes.”

Other industry figures have questioned how much more revenue can be squeezed from the looming changes.

Rachel Griffin, tax and financial planning expert at Quilter, said: “With just weeks to go until the Budget, these figures provide an important reality check against the growing number of tax rumours circulating in Westminster.

“Today’s figures show the Treasury is already benefiting from rising tax receipts under the current system, raising questions about how much additional revenue could realistically be generated from further reforms.”