Inheritance Tax Revenue Hits a New Peak
HM Revenue & Customs (HMRC) has announced that inheritance tax receipts reached £7 billion over the ten‑month period from April 2024 to January 2025. Compare that to the same stretch last year and you’ll see a hefty bump of £700 million.
Why the Numbers Keep Soaring
- House prices are climbing. As more and more families own properties worth more than the tax‑free threshold, the pool of taxable estates swells.
- Tax rules remain frozen. The main allowance sits at £325 000 for five more years, while the residence nil rate band has been stuck at £175 000 since 2020.
- No big headline hikes. These freezes are a stealth move that lets the government keep pulling in revenue without shouting about a tax break.
Projected Figures for the 2024‑2025 Tax Year
HMRC pulled in £7.499 billion last fiscal year. The latest figures suggest they’re on track to break that record again by the end of 2024‑2025.
What Investors Can Do (and Why It Matters)
While the chapter of inheritance tax feels unending, there are still ways to lessen the bite on your estate. Here’s the low‑down, straight from the experts:
Give the Money Away Early
- Gift out of regular income – these are free of IHT from day one, and you can keep giving as much as you like.
- Smaller gifts don’t shake the tax’s heart.
- Time is key: gifts become IHT‑free after seven years.
- Remember: once you give, you’ve relinquished control.
Invest in Unlisted Companies (Business Property Relief)
- These are typically free of IHT after two years.
- It’s a riskier road than outright gifts, but you keep the reins.
- From 2026, you’ll tap into a £1 million Business Relief Allowance – extra holdings get taxed at half the normal rate (20%).
Try an AIM ISA
- ISAs aren’t naturally IHT‑free, but AIM shares can become so after two years.
- From 2026, the IHT rate for AIM ISAs will cut in half to 20%.
- It’s a fun, risky option—great for those who love a dare in the stock market.
Bottom Line
Inheritance tax is no longer just a once‑off bonanza for a few estates—it’s a steady stream that’s growing with every house price bump and every frozen allowance. But by planning ahead—whether it’s giving away money early, investing in private firms, or chasing the right ISA—you can keep more of your legacy from being devoured by the tax man.
