Record Tax Receipts Signal Stealth Increases
Households are facing a significant tax burden as HMRC reports record inheritance tax (IHT) receipts for the first quarter of the 2026/27 financial year. Between April and June 2026, IHT collections reached £2.3bn, a £96m increase compared to the same period last year. This surge highlights the impact of fiscal drag, where frozen tax thresholds and rising asset values push more families into liability for a tax originally designed for the wealthiest.
Income tax, capital gains tax (CGT), and National Insurance contributions (NIC) also hit record highs during this period. Total receipts from these taxes amounted to £132.1bn, an increase of £11.4bn from the previous year. The data underscores a growing trend of stealth taxation, as more taxpayers are caught by thresholds that have not been adjusted for inflation or economic growth.
Fiscal Drag Pulls More Taxpayers into Higher Bands
Tom Trewby, Director of Private Client Tax at Forvis Mazars, described the situation as a "tax rise by stealth." He explained: "The upward trajectory of tax receipts continues for HMRC as fiscal drag pulls more people over the frozen thresholds. Rising asset prices mean that inheritance tax is hitting families it never used to catch, while the number of higher-rate UK income taxpayers is expected to rise to 7.7 million in the current tax year—nearly 2 million higher than in 2023-24." Trewby further noted that the number of additional-rate taxpayers, who earn more than £125,140 and pay the 45p rate of income tax, is projected to reach 1.29 million this year.
The frozen thresholds, which were introduced in earlier budgets, are causing a steady increase in tax revenue without any explicit rate rises. This policy has drawn criticism from tax experts and opposition politicians, who argue that it disproportionately affects middle-income families and those with modest estates.
Inheritance Tax Rules Set to Tighten from 2027
Looking ahead, Trewby highlighted a significant shift coming in April 2027, when pensions will fall into scope for inheritance tax. "This won't only mean higher IHT tax bills, but headaches for executors who will have an additional legislative burden," he said. "The most important step families can take now is to seek advice. Doing this early is the best way to navigate through these changes, and make the most of the reliefs and exemptions available." The inclusion of pensions in IHT calculations is expected to bring many more estates into the tax net, as pension pots can be substantial and were previously exempt.
According to HMRC data, the number of estates paying inheritance tax has already risen sharply, from around 4% in recent years to an estimated 7% in 2024-25.
Political Uncertainty Surrounds Wealth Taxation Future
The record receipts come amid political debate over the direction of wealth taxation. Shaun Moore, tax and financial planning expert at Quilter, commented on the broader context: "With Andy Burnham now established as prime minister, questions around the future direction of wealth taxation are likely to intensify. Burnham has previously argued for reform of wealth taxes and has expressed support for alternatives to the current inheritance tax system, although any significant changes would need to be carefully balanced against the government's wider economic priorities."
Moore added that there is "already speculation about whether ministers could revisit aspects of estate, property or wealth taxation as they search for revenue." However, he advised caution: "While such discussions are likely to continue, families should be cautious about making planning decisions based on rumours rather than policy. The reality is that major reforms often take time to develop and implement."
The combination of record tax receipts and potential future reforms leaves many families uncertain about their financial planning. With stealth taxes continuing to bite, experts urge proactive advice to mitigate the impact on estates and incomes.
