HM Revenue and Customs (HMRC) collected a staggering £2.2 billion in inheritance tax (IHT) in the first three months of the current tax year, new data released this morning reveals—£100 million more than the same period last year.
The increase highlights a worrying trend: more families are being drawn into the IHT trap due to frozen thresholds, rising property prices, and soaring inflation. The government’s take from IHT has now been steadily climbing for two decades, adding to what experts call the highest overall tax burden in 70 years.
Nicholas Hyett, Investment Manager at Wealth Club, called IHT “a meal ticket for HMRC” and criticised the long-standing freeze on the nil-rate band, which has remained at £325,000 since 2009 and is set to stay fixed until at least 2030. The £175,000 residence nil-rate band, introduced in 2017 to protect the family home, also hasn’t budged since 2020.
“These freezes are a form of stealth tax,” Hyett said, “designed to quietly increase the government’s take without the political backlash of a headline-grabbing hike.”
As property values and inflation continue to rise, many families who would not consider themselves wealthy are now being caught by a tax once associated only with the very rich.
Hyett also pointed to the Chancellor’s recent U-turn on IHT rules for non-doms, citing the exodus of wealthy individuals from the UK, while other sectors—such as farmers and AIM investors—face continued uncertainty.
With inheritance tax taking centre stage ahead of the Autumn Budget, financial planners are encouraging families to review their estate strategies.
“In this environment, lifetime gifts are probably more attractive than ever,” said Hyett, especially regular gifts from surplus income, which are immediately IHT-free and popular for paying grandchildren’s school fees.
Alongside inheritance tax, Insurance Premium Tax (IPT) receipts also rose sharply, hitting £2.17 billion in Q1. Emily Jones, Client Consulting Director at Broadstone, said the surge was being fuelled by rising demand for private health insurance, as NHS delays push more people toward employer-backed or self-funded care.
“Employers are stepping up, but rising IPT costs risk pricing out smaller businesses,” said Jones. “If the government wants a healthier workforce and a more resilient NHS, a targeted IPT exemption for health insurance should be on the table.”
With a £20 billion fiscal black hole to fill and tax revenues climbing quietly through frozen thresholds and stealth levies, the Autumn Budget is shaping up to be one of the most politically sensitive in recent memory. Both IHT and IPT may stay untouched in headline terms—but beneath the surface, the Treasury’s quiet tax grip is tightening.
