Record Inheritance Tax Revenue in the UK

In the first four months of the tax year, grieving families in the UK paid a staggering £2.8 billion in inheritance tax, reflecting a 9 percent increase compared to the same period last year. Official figures indicate that the Treasury collected an additional £230 million, with July alone contributing £749 million—marking it as the second highest month for inheritance tax receipts on record. This surge has raised concerns among middle-class households who are increasingly affected by the tax due to stagnant thresholds. The current threshold for inheritance tax, set at £325,000, has remained unchanged since 2009, meaning that as property prices and asset values rise, more families are inadvertently pulled into the tax net. The first £325,000 of inheritances is tax-free, but any amount above this is taxed at a hefty 40 percent. An additional allowance of £175,000 is available when the family home is passed to direct descendants, yet this too is frozen until April 2028. Overall, HMRC reported record tax receipts of £82.5 billion for July, the highest ever for that month. This increase in inheritance tax revenue has sparked speculation about potential hikes in the tax as Chancellor Rachel Reeves seeks to address a reported £22 billion shortfall in public finances. Experts suggest that the upcoming Autumn Statement may prompt a review of inheritance tax policies as a means to bolster government revenue. As families navigate the complexities of inheritance tax, the looming possibility of further changes adds to the uncertainty surrounding financial planning in the wake of loss.