IHT receipts hit record high as Rachel Reeves’ frozen bands raid plague Brits
Inheritance tax receipts soared to a record high in the three months to June 2026, as frozen thresholds drag more Brits into the net.
Receipts hit £2.3bn over the period, according to the latest figures from HMRC, a £96m increase from the same period last year.
In June alone inheritance tax (IHT) receipts totalled £871m compared to the £730m recorded in May.
The rise comes after former chancellor Rachel Reeves decided to extend the freeze on income tax thresholds to 2031 in last year’s Autumn Budget.
Income tax thresholds have traditionally risen in line with inflation to ensure workers given pay rises to keep up with the cost of living aren’t sucked into higher bands.
Reeves’ failure to end the freeze pulled millions of Brits into higher bands, despite not classifying themselves as wealthy.
Tom Trewby, director of private client tax at Forvis Mazars, said: “It’s a tax rise by stealth. Rising asset prices mean that inheritance tax is hitting families it never used to catch.”
The Treasury anticipates receipts continuing to soar amid higher volumes of wealth transfers and the recent rise in asset values drawing in more estates. The inclusion of unused pension pots in IHT’s scope from April 2027 is also expected to lead to higher bills.
Burnham’s inheritance
Burnham’s entry to Downing Street has now prompted industry questions over how he will handle the inherited soaring IHT bills and the future direction of wealth taxation. But industry figures have warned Burnham could further alienate top earners by shaking up wealth taxes in a way that leaves higher rate taxpayers hamstrung.
Shaun Moore, tax and financial planning expert at Quilter, said: “Burnham has previously argued for reform of wealth taxes and has expressed support for alternatives to the current inheritance tax system.
“Any significant changes would need to be carefully balanced against the government’s wider economic priorities… In the meantime, the direction of travel is already well established.”
Burnham has previously floated raising the income tax threshold from £12,570, while leaving both higher and additional rate thresholds where they are, prompting further criticism that middle-class Brits are being left to shoulder heavy tax burdens.
In particular those who are classified as high earners, not rich yet (HENRYs) who are forced to balance multiple costs that prevent them from growing their wealth, including childcare and rent.
Burnham could also be tempted to hike the top rate of income tax from 45 to 50 per cent, having said there is “definitely a case” for doing so.
Mark Jephcott, senior relationship manager at Upmost, claimed the rising tax receipts are making the UK “a less competitive destination for entrepreneurs, investors and internationally mobile wealthy individuals”.