HM Revenue and Customs (HMRC) collected £2.2 billion in inheritance tax (IHT) in the first quarter of the 2024–25 tax year, according to new figures released on Thursday. The figure marks a £100 million increase compared to the same period last year and underscores the growing financial burden on families across the UK.
The surge in receipts comes amid mounting criticism over the government’s continued freeze on IHT thresholds and growing concern that middle-income households are increasingly being drawn into a tax originally intended for the wealthy.
The nil-rate band—the amount that can be passed on tax-free—has remained unchanged at £325,000 since 2009 and is not expected to rise until at least 2030. Similarly, the residence nil-rate band, introduced in 2017 to shield family homes from tax, has been frozen at £175,000 since 2020.
Nicholas Hyett, Investment Manager at Wealth Club, described IHT as a “meal ticket for HMRC,” warning that the current system is turning more ordinary families into taxpayers through “stealth taxes.”
“These freezes are a quiet way for the government to increase its tax take without facing the political backlash that comes with raising rates outright,” Hyett said.
Rising property values, particularly in London and the South East, have pushed many estates over the IHT threshold, leaving families surprised by unexpected tax bills. With inflation further eroding purchasing power, financial planners are urging households to consider estate planning strategies.
“In this environment, lifetime gifts—especially those from surplus income—are an increasingly valuable tool,” said Hyett. “They can be used to support younger generations and are immediately exempt from inheritance tax.”
The issue is expected to feature prominently in the government’s upcoming Autumn Budget, especially following a recent U-turn on inheritance tax rules for non-domiciled residents. Experts warn that uncertainty around future policy changes may be prompting some wealthy individuals to move assets out of the UK.
Meanwhile, Insurance Premium Tax (IPT) receipts also climbed sharply to £2.17 billion in the same three-month period. The increase is being linked to higher demand for private healthcare as NHS waiting lists continue to grow. Employers are stepping in to offer health insurance benefits, but the rising IPT burden is adding pressure on smaller businesses.
Emily Jones, Client Consulting Director at Broadstone, called for reform: “If the government is serious about supporting the NHS and workforce wellbeing, a targeted IPT exemption for health insurance must be considered.”
With the Treasury facing a reported £20 billion fiscal gap, analysts expect the government to rely increasingly on indirect tax measures rather than headline increases. The Autumn Budget, they warn, may keep rates steady while still tightening the tax grip through quiet freezes and levies.
