Taxman’s £2.3bn IHT goldmine

By the Editorial Team · Thursday, July 23, 2026

The UK government raised a record £2.3 billion in inheritance tax revenue in Q2 2023, partly due to growing concerns over upcoming rules that will include pension assets in the tax base from April 2027. This change is expected to significantly increase tax liabilities for many estates, potentially affecting over 121,000 families by 2030 and prompting some to adopt new strategies to reduce their inheritance tax exposure.

The UK government collected a record £2.3 billion in inheritance tax (IHT) revenue during the second quarter of 2023, marking a £92 million increase compared to the same period last year. This rise reflects growing concerns among taxpayers as upcoming changes are set to expand the scope of IHT, particularly affecting pension assets from April 2027.

Inheritance tax is currently levied at 40% on estates valued above a £325,000 threshold, or £1 million for married couples passing on their main residence to children. While only a minority of estates are subject to IHT, projections indicate a broadening impact in the coming years. By 2030, an estimated 31,200 additional estates will become liable for the tax, and over 121,000 estates are expected to face increased tax burdens.

One significant factor driving these changes involves pension wealth. Under current rules, pension funds are generally exempt from inheritance tax. However, legislation set to take effect in 2027 will bring pensions into the IHT net. This adjustment could have severe tax implications for beneficiaries, especially for those inheriting pension assets from individuals who die after reaching the age of 75. In such cases, recipients could face both inheritance tax and income tax charges, potentially resulting in combined tax liabilities as high as 85% for additional-rate taxpayers.

In response to the growing tax pressures, some individuals are taking preemptive measures. For example, one individual reportedly plans to marry after 35 years with a partner in order to reduce the estate’s IHT exposure benefiting their daughter, illustrating how tax considerations are increasingly influencing personal decisions.

Financial experts recommend assessing the total value of estates—including property, investments, savings, and pensions—as an important first step in mitigating potential inheritance tax liabilities. There are several strategies to reduce taxable estate value. Annual gifts of up to £3,000 are fully exempt from tax, and any unused allowance from the previous year may be carried forward for a single year. Additionally, tax-free marriage gifts are permitted up to £5,000 for a child, £2,500 for a grandchild, and £1,000 for others.

Larger gifts can be excluded from the estate if the donor survives for seven years following the gift. Furthermore, the “gifts from surplus income” exemption allows unlimited tax-free gifts provided they come from post-tax income and do not reduce the donor’s standard of living. However, this exemption requires careful record-keeping to demonstrate affordability.

Individuals seeking to navigate the complex inheritance tax landscape are encouraged to consult independent financial advisers for personalized advice. Resources to find certified advisers are available through various online platforms specializing in financial planning and tax guidance.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.