Inheritance Tax Receipts raise 4.4 billion in six months - London Business News | Londonlovesbusiness.com

"The November budget is rapidly approaching, and is expected to raise billions more in tax revenues. The Chancellor shook the IHT piggy bank pretty hard last year, but that doesn't mean she won't come back looking for more. The long term freeze in IHT allowances is driving an inexorable rise in inheritance taxes, but it won't deliver a quick tax windfall."

"Tinkering with things like IHT relief on AIM shares or putting further restrictions on business and agricultural relief probably doesn't move the needle in the short term either. Instead the target for a revenue raising Chancellor is probably gifting rules. Gifts made more than 7 years prior to death are completely free of inheritance tax, while regular gifts made out of surplus income are free from IHT immediately."

"Shifting the seven-year rule to a ten-year rule is one option. Gifts made up to ten years before death could be taxed as if they were part of the estate - making one-off gifts to children to help with things like buying a new house potentially problematic, especially for those who die young, piling financial pain on top of personal grief."

"IHT relief on regular gifts out of surplus income is perhaps the most generous relief available at the moment, and is often used by grandparents to help with things like school or university fees. That could make it a source of extra tax. For example, if grandparents were gifting their children £20,000 a year to cover private school fees, as long as this was out of regular income it would currently be free of IHT."

HMRC recorded £4.4 billion of Inheritance Tax receipts in the first six months of the 2025/26 tax year, £0.1 billion higher than the same period last year, continuing a two-decade upward trend. A long-term freeze in IHT allowances drives rising IHT revenues but does not produce a quick windfall. Short-term changes to AIM relief or business and agricultural relief are unlikely to have immediate impact. Gifting rules present a clearer revenue opportunity: extending the seven-year rule to ten years or curbing the surplus-income relief would bring more gifts into the estate for IHT, affecting one-off house-help gifts and regular grandparent payments such as £20,000-a-year private school fees.

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