Inheritance Tax Receipts raise £0.8 billion in one month
Inheritance tax receipts hit £0.8 billion in April 2025 according to data released by HM Revenue and Customs (HMRC) this morning. This is £97 million higher than in April of the previous tax year, and continues an upward trend over the last two decades. With such a strong start to the new tax year, predictions that Inheritance tax receipts will top the £8.2 billion raised in 2024/25 tax year are looking increasingly realistic.
The OBR estimates suggest nearly 10% of estates will pay death duties by 2030 due to increasing house prices, changes to inheritance tax rules and years of allowance freezes.
Nicholas Hyett, Investment Manager at Wealth Club said:
“Over the last 20 years the inheritance tax tab has increased from £3.3 billion to £8.2 billion. With such a strong start to the 2025/26 tax year this is only going one way – and that is up. This is no accident – leaked government documents made it clear this week that inheritance tax is still seen as a cash cow by some members of the cabinet.
The government’s raids on historically IHT free investments and assets – like pensions, private company shares and AIM shares – create exactly the kind of uncertainty that puts people off making investments. The attack on the AIM market has been particularly egregious where uncertainty is concerned.
The market is designed to help UK smaller businesses raise money, funding growth and investment. To encourage investors to take on the substantial risks associated with investing directly into individual small companies the government has historically treated them as private companies for inheritance tax purposes – meaning no inheritance tax was due.
After much speculation that the government would scrap IHT relief on AIM shares altogether, the relief was cut by 50%. This is far from good news for UK companies looking to raise money, but at least dealt with the uncertainty. Money could start flowing into AIM again knowing what the new regime looked like.
Until this week.
It has emerged that the Deputy Prime Minister has been pushing for IHT relief on AIM to be abolished altogether – even after the 50% relief was announced. This is terrible news for AIM. The limited 50% is back in question, investments will dry up as a result and it will be even harder for small UK companies to raise money.
The FTSE AIM All Share has fallen more than 8% in the last 5 years. It needs certainty about the future of tax treatment, or it will wither and die. It’s hard to understand how a government that’s supposedly all about growth looks set to casually kill the UK’s growth stock market.”
What can investors do to mitigate their inheritance tax bill?
Despite recent reforms there are still ways to reduce the inheritance tax paid by your estate, although many of them do require time and more risk:
Those concerned about inheritance tax should consider:
- Giving money away early. Gifts taken out of regular income, which are not deemed to affect the giver’s standard of living, are inheritance tax free on day one – as are certain smaller gifts. Timing is key as you can give unlimited amounts away but typically these take seven years to be completely inheritance tax free. Of course, once you give away the money you’ve lost control. If you need it back for an emergency, that’s not an option.
- Investing in unlisted companies that qualify for Business Property Relief. These are typically inheritance tax free after two years. Investing in unquoted businesses can be risky, however, unlike giving the money away, you retain control. From 2026 you will have an overall £1 million Business Relief Allowance. Anything in addition will be taxed at half the normal rate or 20%.
- Investing in an AIM ISA. ISAs are not inheritance tax free. When you pass away, your loved ones could miss out on 40% of your hard-earned cash. AIM ISAs are a popular, although much riskier way, to reduce this. Currently AIM shares could be IHT free after two years. From 2026 the IHT will be halved to a rate of 20%.”
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