Inheritance tax (IHT) is raising more money than ever before. The Office for Budget Responsibility forecasts that IHT receipts will reach £8.7 billion in the 2025/26 tax year – a record figure that reflects years of frozen thresholds, rising property values and growing investment portfolios. For many families, the question is no longer whether IHT is relevant to them, but how soon they need to get to grips with inheritance tax planning.

Why More Estates Are Being Caught

The standard IHT threshold – known as the nil-rate band – has been fixed at £325,000 since 2009. With the addition of the residence nil-rate band, a married couple can potentially pass up to £1 million free of IHT in the right circumstances, but many families still find themselves exposed as asset values climb.

The freeze on thresholds is a textbook example of fiscal drag. Property prices alone have risen substantially over the past decade, meaning a family home that once sat comfortably below the IHT threshold may no longer do so. Pension assets, ISA portfolios and buy-to-let property all add to the picture.

The Shift Towards Intergenerational Inheritance Tax Planning

Rising receipts are prompting families to think differently. Rather than treating wealth transfer as something to address in later life or after death, more families are considering:

• Lifetime gifting: Individuals can give away up to £3,000 per year free of IHT, with additional exemptions for wedding gifts and regular gifts from income
• Trusts: These can remove assets from an estate while retaining some control over how they are used
• Earlier wealth transfer: Passing assets to children or grandchildren sooner, allowing the seven-year rule on potentially exempt transfers to run its course
• Pension structuring: Pensions currently sit outside of estates for IHT purposes, though proposed changes from 2027 may alter this

The earlier planning begins, the more options are available.

The Conversation That Too Many Families Skip

Technical planning tools – wills, gifting, trusts, allowances – are important. But there is a broader opportunity that many families overlook entirely: involving children and grandchildren in financial conversations from an early age.

This does not mean revealing every detail of family wealth. It means helping younger family members understand the principles behind financial decisions: why certain investments are held, what long-term planning is designed to achieve, and what responsibilities come with managing wealth.

Those who are most financially confident as adults have typically grown up in households where money was discussed openly — where spending, saving and long-term thinking were treated as normal topics rather than private ones.

Building this awareness early pays dividends well beyond IHT planning. A young adult who understands financial principles is far better placed to manage an inheritance responsibly, avoid costly mistakes and maintain the wealth their parents spent a lifetime building.

The Role of a Financial Planner in Family Conversations

A good financial planner does more than manage numbers. They can act as a neutral, knowledgeable presence in family discussions about wealth — helping to frame conversations in a way that is clear, comfortable and constructive rather than awkward or divisive.

They can explain:

• How an estate is structured and why
• What the tax implications of different decisions look like
• How gifting, trusts or investment structures can reduce exposure over time
• What the next generation might expect to receive, and when

There is also a practical continuity benefit. Children who are involved in their parents’ financial planning from an early age often choose to continue working with the same adviser as adults — ensuring a consistent, long-term approach to family wealth across generations.

In Summary

• IHT receipts are forecast to hit a record £8.7 billion in 2025/26, driven by frozen thresholds and rising asset values
• The nil-rate band has been stuck at £325,000 since 2009, drawing more estates into scope each year
• Intergenerational planning — including gifting, trusts and earlier wealth transfer — is becoming a priority for more families
• The most overlooked element of estate planning is the family conversation itself, not just the technical tools
• Involving children in financial discussions early builds the financial literacy they will need to manage inherited wealth responsibly
• A financial planner can help structure those conversations as well as the plan itself

The record IHT forecast is a prompt to act — but the most valuable thing many families can do right now is not a technical restructure. It is simply starting to talk.