UK Inheritance Tax (IHT) is quietly becoming one of the Treasury’s biggest earners. In 2022–23, the government collected a record £6.7 billion – up 12% on the previous year – and that was before the latest rule changes took effect.

Why the rise?

Several trends are pushing more families into the IHT net:

• Rising property prices and asset values over the last decade

• Frozen thresholds – the £325,000 nil rate band hasn’t changed since 2009, and the additional £175,000 residence allowance for passing your home to direct descendants has been fixed since 2020–21

• Inflation quietly eroding the real value of allowances

As a result, more estates are paying IHT – 31,500 in 2022–23, up 13% in just one year. And the Office for Budget Responsibility predicts that by 2029–30, nearly one in ten estates will be liable, with the annual tax take expected to exceed £14 billion.

What’s changed in the rules?

The reforms announced by Chancellor Rachel Reeves in October 2023 tightened reliefs on:

• Business property

• Agricultural land

• Unspent pensions

• AIM-listed shares in smaller companies

For families with these types of assets, it’s now harder to reduce or avoid the 40% charge on anything above the thresholds.

Why it’s tricky for families

The biggest challenge is uncertainty. If thresholds stay frozen while asset values rise, the tax bill in 20 years’ time could be far larger than expected. That can disrupt long-term plans – especially if you hoped to pass on a specific sum, property, or asset.

On top of that, IHT rules are complex and regularly reviewed. Strategies that worked in the past may no longer be effective.

How planning can help

This is where our Protect and Flourish services work hand-in-hand. By acting early, you can keep more of your estate in your family’s hands, and less in the Treasury’s.

A qualified financial planner can:

• Explore lifetime gifting – Gifts made more than seven years before your death are usually tax-free.

• Maximise available reliefs – Business and agricultural property reliefs can still be valuable, but the criteria are strict and evolving.

• Structure your estate efficiently – Making full use of spousal allowances, trusts, or insurance to cover future liabilities.

The bottom line? You can’t control government tax policy, but you can control how prepared you are for it. With the right plan in place, you’ll have clarity, confidence, and the reassurance that more of your legacy will go to the people and causes you care about.