HMRC today reported that Inheritance Tax receipts for the period April to July this year were £2.8bn, up £200m year on year.

The rise has brought concern from industry experts that the trajectory for IHT is firmly upwards and new Chancellor Rachel Reeves may accelerate the trend in her Budget in October.

Laura Hayward, tax partner at wealth manager Evelyn Partners, said more estates were being dragged into the tax.

She said: “Inevitably, as more estates find they exceed the nil-rate bands, and more assets in each liable estate become taxable, the IHT take creeps upwards. With no complaints on that from the Treasury, there is little incentive for the Chancellor to halt this trend. Rather, there will be a temptation to capitalise on it to fill gaps in the public finances.

“Senior Labour figures have made it clear they think certain reliefs – specifically business and agriculture property relief – are too generous and think-tanks seem keen that defined benefit pension pots are brought into the remit of IHT. We already know that the new Government will crack down on ‘abuse’ of reliefs and that can easily lead to a review of the reliefs themselves.

“So Rachel Reeves’ first big fiscal statement on 30 October will be closely watched for any review into IHT reliefs, or suggestion that pension pots could be deemed part of a deceased’s estate.” 

“The Office for Budget Responsibility forecasts that the share of deaths resulting in the payment of inheritance tax will rise to 6.3 per cent by 2028–29, the highest level since the 1970s. Revenue from inheritance tax and its predecessors has increased over time in real terms, from around £2billion in 1980/81, to £7.5billion in 2023/24, and will reach almost £9billion by 2028/29 (all amounts in 23/24 prices).” 

Rachael Griffin, tax and financial planning expert at Quilter, said the increase, ahead of first Labour’s first autumn budget, will “rekindle” debates about whether this tax will be increased as the government attempts to shore up public finances.

She added that at the same time, PAYE income tax and national insurance receipts for April 2024 to July 2024 have climbed to £143.4 billion - an increase of  £2.3 billion compared to the same period last year.

Paul Barham, partner at Mazars, said: “With tax-free thresholds still frozen, IHT is nipping at the heels of families with modest estates. The new government’s Autumn Budget may herald a change to inheritance tax rules but the devil will be in the detail, and without a crystal ball we don’t yet know what that will hold.”

Lisa Caplan, director of OneStep Financial Planning at Charles Stanley, said: "The government has a large deficit to fill and whilst it has said there will be no increases in direct taxes, there is plenty of scope for peripheral taxes like IHT. Whilst it brings in less than 1% of total government revenues, there are plenty of exemptions and exceptions that could be revisited.

“Business relief, pensions relief, and agricultural land relief have been touted as possibly open to review.”

Nick Henshaw, head of intermediary distribution at Wesleyan, said: “As the thresholds remain frozen, we’re seeing growing demand for IHT advice, and an increasingly younger demographic looking for planning support.

“We’re also seeing more people coming to us who have already tried to develop DIY IHT strategies. While some are effective, there are some areas that are being overlooked – such as people buying life policies to cover potential IHT bills, but not buying whole of life policies, which could leave them uncovered if they live beyond the policy’s scope.

“With IHT receipts likely to remain elevated without any change to the regime, advisers will continue to play a critical role in helping families develop robust strategies that will support them, and their loved ones.”