The data shows that 4.62% of UK deaths triggered an IHT charge, up from 4.39% in the previous year—a 0.23 percentage point increase. This trend reflects growing pressure on households as rising property values and frozen tax thresholds pull more estates into the IHT net.
In total, 31,500 estates were liable for IHT in 2022–23, up 13% (3,700 more estates) from the previous year’s figure of 27,800. The surge is likely a result of the ongoing freeze on the IHT nil-rate band, combined with asset price growth—particularly in the housing market.
IHT liabilities collected for the 2022–23 tax year reached £6.7 billion, a rise of £710 million (12%) on the previous year. This marks a new record high and continues a multi-year upward trend in IHT receipts.
With no immediate plans to raise the nil-rate band—which has been frozen at £325,000 since 2009—analysts expect the number of estates caught by IHT to continue rising, unless reforms are introduced.
Nicholas Hyett, investment manager at Wealth Club said: “Frozen inheritance tax allowances mean the number of estates paying inheritance tax continues to rise. This is no accident, the government is actively using inflation to squeeze more tax out of middle and upper-middle income families. The trend will have only gathered pace in the years since 2022/23.
“Large estates continue to shoulder the overwhelming majority of the burden. Just 1% of estates paid around 65% of all inheritance tax in 2022/23 and the average bill for those estates valued at over £10 million hit £3.6 million. However, the increase in the number of small estates paying the tax means the average IHT bill fell slightly in 2022/23 to £212,000.
“The argument that less than one in twenty estates pay IHT is wilfully misleading in our opinion, because that number is so heavily influenced by the fact transfers to spouses are free of inheritance tax. If one parent dies and leaves all their money to the surviving spouse, then there is no inheritance tax to pay on that estate. However, the estate could be liable for IHT when the second parent dies. In this scenario, HMRC would argue that 50% of estates are free of inheritance tax, but that’s clearly not how families would view the situation. The reality in this scenario is that 100% of families have been affected by inheritance tax.”
Looking ahead these numbers show just how damaging an exodus of wealthy individuals could be to the UK tax base, according to Hyett.
He continued: “IHT is particularly controversial for the wealthiest, most globally mobile taxpayers. Why stay in the UK and give up c. 40% of your wealth, when you can move overseas and cut the bill dramatically – it’s not like you don’t have the cash to visit the UK regularly to see friends and family.
“The government is hoping its reforms will increase the effective tax rate paid by these highest earners going forwards, it might succeed, but it would be no surprise if that was offset by a decline in the number of people who are prepared to stick around and carry the can. These numbers are worth watching closely over the next few years – you might just see the much maligned Laffer curve in live action.”
Ian Dyall, head of estate planning at leading UK wealth management firm Evelyn Partners, concurred: ‘This data really just confirms what we already know: that more families are incurring inheritance tax liabilities, and more assets in each estate are becoming subject to tax – even before the IHT measures announced at the last Budget take effect.
“As asset prices, especially equities and property, continue to rise the frozen nil-rate bands offer less and less protection against IHT and families that take no steps to mitigate their liabilities will either get drawn into the scope of IHT or have the tax levied on a greater proportion of their assets.
‘The OBR forecasts total IHT liabilities for 2024/25 to rise 11.6% on the previous year to £8.4bn, while receipts data shows HMRC has so far taken £8.2bn for that period. The OBR also forecasts that in the current 2025/26 tax year IHT will raise £9.1bn.
“What these lagged annual liability figures do give us is some granular detail on how IHT is distributed and what reliefs are being used. First, while many more households are being drawn into the IHT net, it remains the case that the bulk of liabilities tend to be fairly concentrated among a small number of large estates. About 6,400 families with net wealth greater than £1.5m paid £4.3bn in IHT – or 64% of the total.
“Families with that level of wealth tend not to garner much sympathy but the Treasury cannot sustainably prop up the public finances by taxing the wealthiest 1 or 2 per cent forever without consequence. The danger with seeking further taxation of wealth at the next Budget – whether that is via capital gains tax, inheritance tax or some other mechanism – is that such households, which are often wealth and business creators in themselves and quite mobile, could get fed up and leave the country.
“As they are responsible for a good chunk of overall tax revenues in the UK that would be counter-productive.
“Alternatively, they will change their behaviour in such a way as minimise tax liabilities. It’s likely that, as IHT at 40% deplete the estates of wealthy families more significantly year by year, more of them will take advice and seek ways of sidestepping the tax, such as shrinking their estates through lifetime gifting. Which is why the gifting regime could be in the sights of the Treasury for further reform.’
At her Autumn Budget last year, Chancellor Rachel Reeves announced that defined contribution pension pots will be included in estates’ inheritance tax liabilities from April 2027, and she also froze the nil rate bands for an extra two years, until April 2030.
She additionally reduced business and agricultural property relief from April 2026. The first £1mn of combined business and agricultural assets can still be passed on tax-free, but IHT will be levied at 20% on the rest. A 20% rate will also apply to AIM shares.
Dvall added: “After these two IHT reforms have kicked in, annual receipts are forecast to rise to £14.3bn in 2029-30, with around £2.5bn of the rise in the intervening years due to the policies announced in October 2024.”
