Inheritance Tax (IHT) has quietly become one of the UK’s most significant property taxes as house values rise and frozen thresholds drag ever more people into the tax net.
Figures from HM Revenue & Customs show IHT receipts hit £5.8bn in the first eight months of the 2025/26 tax year, some £84m higher than the same period last year.
£9.1bn
The Office for Budget Responsibility has forecast that IHT will raise £9.1bn over the full 2025/26 tax year. The main nil-rate band has been fixed at £325,000 since 2009, and has now been frozen until at least April 2031, meaning more and more homeowners are becoming liable for the tax as the value of their homes rises.
For many households, the family home is by far their largest asset, and in the more expensive regions, even modest properties can push estates beyond the threshold, after which the 40% IHT rate kicks in.
Rising property values mean more estates are being drawn into IHT, often among families who would not traditionally consider themselves wealthy.”
Shaun Moore (pictured), tax and financial planning expert at Quilter told the FT: “Rising property values mean more estates are being drawn into IHT, often among families who would not traditionally consider themselves wealthy.”
Isaac Stell, investment manager at Wealth Club, adds that: “The Budget confirmed that inheritance tax is already one of the Government’s most dependable revenue raisers.
stealth tax
“Frozen thresholds and rising asset values have turned it into a stealth tax that raises substantial sums without headline-grabbing announcements.”
To add to the Government’s tax take in the area, in the previous budget, Rachel Reeves restricted the reliefs for agricultural and business property to £1m.
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