Inheritance tax receipts are on track to reach £9billion by the end of the tax year, as monthly figures reach a new record high.

The latest HM Revenue & Customs figures show that inheritance tax (IHT) receipts between April and July 2025 reached a record £3.1billion. 

It represents a £200million increase compared with the same period a year ago - and it’s only set to rise as rising property prices drag more families into the net. 

The headline rate of IHT is 40 per cent, charged on anything over the £325,000 'nil-rate band'. 

People passing on their home to direct descendants, children and grandchildren, are given an extra £175,000 allowance.

Spouses and civil partners can also share their allowance, meaning a couple can pass on a total of £1million to their children tax-free.

The nil-rate band remains frozen until 2030, and with property prices still elevated, an increasing number of families will have to pay the death tax. 

Tax experts at Irwin Mitchell Private Client Advisory predict IHT receipts are on track to exceed £9billion by the end of the current tax year, reaching £10billion by 2026-27.

‘It now looks likely that IHT receipts will exceed £9billion by the end of March 2026, and following the significant changes due to be introduced in 2026-27, I wouldn’t be surprised if the number is closer to £10billion 12 months later,’ said partner Andrea Jones.

Elsewhere, PAYE income tax and National Insurance contributions reached £160.6billion over the same period, up £13.5billion year-on-year.

As with IHT, frozen thresholds are dragging more workers into higher tax bands, while businesses shoulder rising National Insurance Contribution costs.

Will there be more changes to inheritance tax?

Last autumn, the Chancellor announced a series of changes to IHT which will see thousands more families liable to pay the tax.

From April 2026, full Agricultural and Business Property reliefs will be capped at £1million per individual before dropping to 50 per cent relief on assets over that value.

The following year, unused pension pots will be included in a person’s estate for IHT purposes, which is expected to bring more families into the scope of IHT.

‘We won’t see how much money [the changes] bring in through the Treasury door until well after those dates,’ said Ian Dyall, head of estate planning at Evelyn Partners. 

‘However, it is well known that families, and especially wealthier ones, tend to take steps to mitigate significant tax increases and to change their behaviour, which raises the risk that the tax take disappoints’

Financial advisers have reported an uptick in clients gifting more cash to their children and grandchildren to lower their IHT bill, but Reeves could soon put a stop to this.

She is reportedly eyeing a lifetime gifting allowance, which would affect those who try to avoid IHT by giving away money to their family before they die.

Another option for Reeves is to extend the seven-year rule to 10 years, although this would fly in the face of the reduction to five years, as first explored by the now-defunct Office for Tax Simplification.

The seven year rule means gifts are free from inheritance tax if the giver survives for seven years after giving them.  

Dyall predicts changes to gifting rules are unlikely to move the dial enough, though.

‘Funds gifted to younger people are more likely to be spent and fed back into the economy, and in a roundabout way boost VAT and stamp duty land tax for instance. 

'Maybe Treasury officials are not too worried about the short term IHT receipts and more keen to get money moving out of tax-protected pensions?

‘But this is still not going to raise the sort of sums that the public purse looks like it needs, certainly not in the short or medium term, so one wonders whether another move on IHT would be worth all the negative headlines.’

Meanwhile, the Treasury is also reportedly looking at new taxes on higher value homes or capital gains on primary residences in the Autumn Budget.