HM Revenue & Customs has published its latest tax receipt figures, revealing significant movements in two key areas of personal taxation. The data shows inheritance tax receipts have climbed to £6.6 billion during the first nine months of the 2025/26 tax year, representing a notable 4% increase compared to the same period in the previous year.
Diverging Tax Trends
While inheritance tax receipts have shown growth, capital gains tax figures tell a different story. HMRC reports that CGT receipts reached £13.6 billion, marking an 8.4% decrease from the £14.9 billion collected in 2024. This divergence highlights how different tax streams can move in opposite directions depending on economic conditions and policy changes.
Expert Warnings About Future Increases
Financial experts are sounding alarm bells about the potential for inheritance tax receipts to rise substantially in coming years. Riz Malik, Director at Southend-on-Sea-based R3 Wealth, explains that fiscal drag and upcoming policy changes are creating a perfect storm for IHT increases.
"IHT revenue is going to explode in the coming years," Malik states. "We are receiving an increasing number of enquiries. With pensions being added to the pot in 2027, more and more people will fall into the realm of IHT."
Malik shares a concerning example from his client work: "I am dealing with one client where HMRC would be the biggest beneficiary if she died, versus what the children would receive."
The Impact of Frozen Thresholds
Rob Mansfield, Independent Financial Advisor at Tonbridge-based Rootes Wealth Management, emphasises how frozen tax thresholds combined with inflation are drawing more people into the inheritance tax net. "With frozen thresholds and inflation pushing prices up, IHT is only going to catch more people," he warns.
Mansfield highlights the significance of the April 2027 deadline: "This is before April 2027 when unused pensions are being brought into people's estates. The Treasury will be rubbing their hands in anticipation of more money coming their way."
The Importance of Proactive Planning
Both financial experts stress the critical importance of early and comprehensive inheritance tax planning. Malik notes that rising property prices mean more people are losing their residential nil rate band, making planning essential for those who want to protect their legacy.
"Planning is essential if you want to safeguard your legacy," Malik advises. "That is, unless you want it to contribute to the government coffers and don't feel like you have paid enough during your working life."
Mansfield adds a crucial timing consideration: "The key to IHT planning is giving yourself as much time as possible as it can take a number of years to feel the full benefit."
Political Context and Future Outlook
The inheritance tax landscape is becoming increasingly politicised, with Malik noting that IHT is being specifically targeted by the current Labour government. This political focus, combined with technical factors like fiscal drag and the upcoming inclusion of pensions in estate calculations, suggests the current upward trend in IHT receipts is likely to continue and potentially accelerate.
As taxpayers navigate these changing conditions, the £232 million increase in inheritance tax receipts over the previous year serves as a tangible indicator of how tax policy and economic factors are reshaping personal financial planning requirements across the country.
