Inheritance tax receipts climbed £200m rising 5.7% in the three months to the end of August, new HMRC data published today revealed.

For April to August IHT receipts were £3.7bn.

That keeps the figure on target to be another record-breaking IHT year, with the OBR’s most recent forecast, predicting IHT will generate £9.1bn for the Treasury in 2025/26.

Last year’s record-breaking year of IHT receipts saw £8.2bn collected through the tax.

Jonathan Halberda, specialist financial adviser at Wesleyan Financial Services, said: “With the Autumn Budget looming, another rise in IHT receipts adds to the pressure on families already bracing for change.

“We’re seeing growing panic, with clients eyeing drastic steps like withdrawing pensions early in a bid to stay ahead of possible tax bills. But these knee-jerk moves can backfire, triggering bigger tax bills or long-term financial pain.”

Ian Dyall, head of estate planning at Evelyn Partners, said: "The continued rise in inheritance tax receipts is the result of ‘fiscal drag’, with a long-standing freeze on the IHT nil-rate bands spanning a period when asset prices have risen. With the NRBs frozen until 2030, raised property values and investment assets are drawing more families into the IHT net—often without them realising it.

“This is before the changes to IHT reliefs announced at the 2024 Budget have come into force – changes that are already reshaping estate planning.”

He warned: "The rise in receipts is not just a fiscal story, it’s a wake-up call. Many households are sleepwalking into substantial tax bills.”

Monthly IHT receipts. source: HMRC

Stephen Lowe, director at retirement specialist Just Group, said: “As the Chancellor continues to feel the fiscal pressure, and having ruled out hikes on major taxes, she will want to explore all her options to raise revenue. Given inheritance tax targets those who are wealthiest in society it’s entirely possible that it will once more be in the Chancellor’s sights.”

Nicholas Hyett, investment manager at Wealth Club said: “As things stand inheritance tax may only affect around 1 in 20 estates, but that number is on the increase as an ever greater number of estates become liable for the most hated of taxes. Years of freezes in thresholds, matched with increasing house prices and rising inflation have pushed more families, who might not consider themselves to be wealthy and would not historically have qualified for the tax, over the threshold.”

The current inheritance tax allowance has been frozen at £325,000 for 16 years, and remains frozen until 2030. The £175,000 residence nil rate band hasn’t changed since 2020.

The House of Lords Finance Bill Sub-Committee has begun a consideration of government proposals to impose inheritance tax on pensions on death.

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The pensions industry should drive small pension pots consolidation by 2030, trade body Pensions UK has urged.

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New figures from the FCA published today have revealed that the total number of pension plans accessed for the first time rose by 8.6% to 961,575 compared to 885,455 in 2023/24.

The figures were included in the regulator’s latest retirement income data for 2024/25.

In particular the figures revealed a surge in people accessing pension pots worth more than a quarter of a million pounds.

The number went up in the six months between April 2024 and September 2024, coinciding with fears that the first Budget of the new Labour government would include measures such as capping or scrapping tax-free lump sums.

But the number went up again in October 2024-March 2025, in response to the Budget announcement that pensions would be included in the IHT net from April 2027.

In total, more than £53bn was taken out over the year in cases where pension pots were moved into drawdown but not fully emptied out.

Steve Webb, partner at pensions consultants LCP, said: “These figures show graphically how uncertainty about pensions and tax can move the market.

“Given that pensions should be a long-term business, it is deeply disappointing that consumer behaviour is being driven so profoundly by uncertainty around public policy.”

Jon Greer, head of retirement policy at Quilter, said: “The continued growth highlights how more people are leaning on their pensions earlier, often to meet rising living costs and fill income gaps elsewhere.

“Some of the increase will also reflect the demographic bulge of baby boomers reaching retirement age, so part of the rise is structural and will naturally continue in the years ahead. But the real concern is the scale of withdrawals and the lack of advice that accompanies them, which risks leaving many without adequate income later in life.”

The value taken from pension pots overall leapt by more than a third, rising 35.9% from £52.2bn in 2023/24 to £70.9bn in 2024/25. Drawdown products saw the largest increase in uptake, with sales climbing 25.5% to 349,992, cementing their position as the dominant choice for retirement income.

Mr Greer said: “While flexibility remains attractive, it also exposes retirees to the risk of depleting their savings too quickly if withdrawals are not carefully managed.”

Annuities continued their modest revival with sales up 7.8% to 88,430. Mr Greer said: “Higher interest rates have made annuities more competitive, and while volumes remain far below their pre-pension freedoms peak, more people are starting to recognise the value of securing a guaranteed income in retirement.”

 Unless there is a big surge in inflation in the next two months, the state pension will rise by 4.7% next April.

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More than a third, 36%, of Gen Xers aged between 44-59 are in the dark when it comes to knowing about their parents’ inheritance plans.

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