The £96 Million IHT Warning: Inheritance Tax Is Becoming a Mainstream Planning Issue
HMRC has published a figure that should make families pause.
Inheritance Tax receipts reached £2.3 billion between April and June 2026, £96 million more than during the same period last year. June’s receipts were the highest recorded for any single month.
That does not mean every family is about to receive an Inheritance Tax bill. Nor does it mean that the estates paying tax during this period arose from deaths occurring in the same three months. There is normally a delay between a death, the calculation of the liability and tax payment.
But the direction of travel is clear.
More wealth is being brought within the Inheritance Tax system, and families who would never describe themselves as wealthy are increasingly discovering that their estate is more valuable and more complicated than they realized.
Most estates still do not pay IHT—but that is not the whole story
Credible estate planning should begin with facts, not fear.
The latest complete HMRC liability statistics show that 4.62% of UK deaths resulted in an Inheritance Tax charge in 2022/23. In other words, fewer than one in twenty estates paid the tax.
However, the number of taxpaying estates increased by 13% compared with the previous year, while total liabilities created rose by 12% to £6.7 billion. HMRC attributed that increase to rising asset values, higher volumes of wealth transfers and the continued freezing of tax-free thresholds.
Inheritance Tax remains a minority tax. But the affected minority is changing.
A family does not need a country estate, a large investment portfolio or an obvious concentration of wealth to encounter the issue. A home that has appreciated over several decades, combined with savings, investments, life assurance and pension wealth, can create a substantial estate on paper.
That family may not feel wealthy. The tax calculation does not ask how wealthy they felt.
The thresholds have not kept pace with family wealth
The ordinary nil-rate band has remained at £325,000 since the 2009/10 tax year.
A further residence nil-rate band of up to £175,000 may be available where a qualifying home passes to direct descendants. Unused allowances may also be transferable between spouses and civil partners, meaning some qualifying couples can potentially pass on as much as £1 million before IHT becomes payable.
But that £1 million figure is not an automatic allowance for every couple. The residence nil-rate band is subject to conditions and can be reduced where the estate exceeds the £2 million taper threshold. Family status, the destination of the home, previous gifts and the way the estate is structured can all affect the outcome.
Meanwhile, property values, pension pots and other assets have continued to grow.
That is how families drift into exposure: not necessarily through a sudden increase in wealth, but because their assets move while the main thresholds remain still.
The pension change makes a full estate review essential
The next significant change arrives on 6 April 2027.
For deaths occurring on or after that date, most unused pension funds and pension death benefits will be brought within the deceased member’s estate for Inheritance Tax purposes.
Finance Act 2026 received Royal Assent on 18 March 2026, putting the main reform into law. Personal representatives will have responsibility for identifying the relevant pension arrangements and dealing with the IHT reporting and payment process. Further regulations, HMRC guidance and supporting tools are still being developed ahead of implementation.
For many years, families have treated pensions as separate from the rest of the estate plan. A pension might have had its own nomination, its own scheme rules and, in many cases, favorable treatment for IHT.
That separation can no longer continue.
The Will, pension nominations, trusts, lifetime gifts, property ownership and the financial needs of a surviving spouse must all be considered together.
Changing one part without understanding the others may simply move the problem.
The iTrust121 view: begin with the family outcome, not the product
At iTrust121, we believe the answer is not panic, speculation or a rush into a particular arrangement.
The answer is a properly coordinated review.
Good estate planning should establish:
The current and projected value of the entire estate, including pension wealth.
Whether the Will, pension nominations and any letters of wishes point towards the same intended outcome.
Whether the plan protects a surviving spouse without unintentionally concentrating all the family wealth in that survivor’s eventual estate.
Whether sufficient liquidity would be available to meet tax, administration and professional costs without forcing a rushed sale of property or investments.
Whether existing trusts remain properly funded, administered and appropriate for the family’s present circumstances.
The purpose of planning is not simply to reduce a tax calculation. It is to preserve choices.
Those choices might include protecting a vulnerable beneficiary, providing for children from an earlier relationship, controlling the age at which an inheritance is received, creating continuity after incapacity or death, or preventing assets from passing outright into circumstances the family did not intend.
A trust is a planning structure—not a magic tax exemption
Trusts can play an important role in achieving those objectives. They can provide control, continuity and protection where an outright gift or inheritance would be unsuitable.
But credibility requires us to say what trusts are not.
A trust is not automatically exempt from Inheritance Tax. Depending on the type of trust and the assets involved, there may be tax consequences when assets enter the trust, periodic charges during its lifetime and exit charges when property leaves it. There can also be reporting, administration and trustee responsibilities.
The family purpose must therefore come first. The structure follows.
A trust created without a clearly defined purpose is not planning. It is paperwork.
Planning should begin before a crisis
The wrong response to the April 2027 pension change would be to withdraw pension funds indiscriminately, make unaffordable gifts or rewrite beneficiary nominations without considering the wider consequences.
The right response is to review the plan while there is still time to make informed decisions.
For some families, no immediate restructuring will be required. For others, the review may lead to changes involving the Will, pension nominations, lifetime gifting, life assurance, property ownership or trust planning.
Every family will be different.
What matters is that the eventual outcome is the result of a deliberate decision—not an outdated document, an overlooked pension or an assumption that the estate was “not large enough” to require planning.
At iTrust121, our approach is to make estate and trust planning simpler to understand, properly explained and carefully arranged, while keeping the family’s intended outcome at the centre of the process.
Because the most important question is no longer simply:
“Will my estate pay Inheritance Tax?”
It is:
“Will my current plan still protect the right people, in the right way, under the rules that will apply?”
That is a question worth answering before the family is left with no opportunity to change the result.
This article provides general information only and does not constitute personalised legal, tax or financial advice. The treatment of an estate, pension or trust will depend on individual circumstances.
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£2.3 billion collected in three months. A further £96 million compared with last year.
The latest Inheritance Tax receipts are not evidence that every estate will face a tax bill. Most will not.
But they do show why families can no longer assume that IHT planning is relevant only to the exceptionally wealthy.
Frozen thresholds, appreciating homes and the inclusion of most unused pension funds from April 2027 are changing the calculation.
In this week’s article, I consider what the figures really tell us, why pensions can no longer be treated separately from the wider estate plan, and why trusts should be used with a clear family purpose—not presented as a universal tax solution.
Planning should begin with the outcome. The structure comes second.
James Berkeley
Senior Counsel | iTrust121