Inheritance Tax Is No Longer Just a Tax for the Wealthy

Inheritance Tax (IHT) was once viewed as a tax that affected only the very wealthiest families. However, the latest figures suggest that more and more households are being drawn into the Inheritance Tax net, and recent changes announced by the government could mean this trend accelerates further.

HMRC’s latest data shows that Inheritance Tax receipts reached a record £936 million in September 2026, helping push total receipts for the first six months of the tax year to £4.72 billion. This follows a record-breaking £8.5 billion collected in the previous tax year and continues a pattern of steadily increasing tax revenues from estates.

So why is more Inheritance Tax being collected than ever before?

Why Is More Inheritance Tax Being Collected Than Ever Before?

One of the key reasons is that Inheritance Tax thresholds have remained unchanged for many years.

While the nil-rate band has been frozen at £325,000, house prices and investment values have generally increased over time. As a result, estates that may once have fallen below the threshold now find themselves facing a potential Inheritance Tax liability.

This is often referred to as “fiscal drag”, where tax allowances remain static while the value of assets continues to rise.

For many families, particularly those who own property in areas that have experienced strong house price growth, this can result in a larger proportion of their estate becoming taxable.

The Pension Rule Change That Could Change Everything

While rising asset values have gradually increased the number of estates paying Inheritance Tax, a significant change is planned for April 2027.

Currently, pensions are often one of the most tax-efficient assets to leave to future generations because they generally sit outside an individual’s estate for Inheritance Tax purposes.

However, from April 2027, unused pension funds and certain death benefits are expected to be brought within the scope of Inheritance Tax.

For many people, their pension represents one of the largest assets they own, often sitting alongside their home as a major source of wealth.

This means families who have deliberately preserved pension assets for future generations may see a greater proportion of their wealth exposed to Inheritance Tax than they had anticipated.

Why This Matters

Many people still assume Inheritance Tax is only relevant to millionaires.

In reality, a combination of rising property values, growing investment portfolios, frozen tax thresholds and forthcoming pension changes means that more families may need to consider the impact of Inheritance Tax than ever before.

What was once a niche planning issue is increasingly becoming a mainstream financial planning consideration.

Looking Ahead

With Inheritance Tax receipts already reaching record levels, it is reasonable to expect further increases if pensions become part of the taxable estate from 2027 as planned.

While nobody can predict future government policy with certainty, the direction of travel is clear. More wealth is being brought within the Inheritance Tax system, and more families are likely to be affected in the years ahead.

For those who have worked hard to build wealth during their lifetime, understanding how their estate may be treated on death is becoming an increasingly important part of financial planning.

HM Revenue and Customs practice and tax legislation are complex and subject to individual circumstances. Tax rules and their interpretation can change in the future and cannot be guaranteed.

Approved by The Openwork Partnership on 03/11/2026

Statistics referenced in this article are based on HMRC figures published in October 2026 and were accurate at the time of writing.