The inheritance tax threshold of £325,000, which was already frozen at current levels until April 2030, will now stay fixed at these levels for a further year until April 2031.
This has prompted calls from experts for individuals and families to consider gifting and estate planning sooner rather than later.
Rising receipts
Inheritance tax receipts are forecast to raise £9bn in 2025/26, an annual increase of 4.5%. And, with the threshold at which households’ estates begin paying the death tax frozen for three years, rising house prices are expected to drive receipts higher. According to the Office for Budget Responsibility (OBR), these are expected to reach £14.5bn in 2030-31.
However, relative to the Spring Statement 2025 forecast, receipts are expected to be £0.8bn per year lower by 2029-30.
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Stephen Lowe, director at retirement specialist Just Group, said: “The OBR’s latest projections show an upgrade to inheritance tax receipts over the current financial year, while the tax take for the rest of the decade has been trimmed slightly.
“Frozen thresholds, rising asset prices, and the changes announced in last year’s Autumn Budget continue to push more estates into the scope of IHT.
“However, despite the small downgrade over the decade, the trend is still moving up, pulling in more and more estates and reinforcing that this is no longer a tax confined to the very wealthy as it takes a bigger bite of Middle Britain’s wealth each year.
“It is important that people who think their estate may be subject to inheritance tax have an up-to-date valuation of their estate, especially their property, so they understand whether they could be affected. Estate planning is complex, and taking professional financial advice can be immensely valuable for those wanting to manage their estate efficiently and pass on the maximum inheritance to loved ones.”
Gifting ‘can be significantly more tax-efficient’ while still alive
Michelle Holgate, financial planning director at RBC Brewin Dolphin, said: “People across the country will be breathing a sigh of relief to see inheritance tax rules left untouched, although the threshold is frozen for another year to 2031. Now is not the time to be complacent when it comes to estate planning.
“Our recent survey found that nearly three-quarters (73%) of wealthy individuals have never made a financial gift. Our advice to those looking to pass on as much of their wealth as possible is to start the process of gifting as soon as possible. Too many people wait until death before passing on their assets, when it can be significantly more tax-efficient to gift money while you are still alive. Plus, you get the added bonus of seeing your loved ones benefit from your generosity.”
Reeves also chose to freeze income tax thresholds and National Insurance contributions (NICs) for a further three years, dragging millions more households into the tax system and pushing those already paying tax into higher bands.
