Inheritance Tax Planning: £9 Billion Forecast

Written by Abigail Bird - 01.07.25

A new report predicts that the UK's inheritance tax (IHT) bill will reach £9 billion by 2027. With more than 37,000 estates expected to be liable and London leading the way in terms of tax burden, this is a striking figure that reflects a real shift in how families are affected.

Inheritance tax is no longer a concern only for the very wealthy. It is rapidly becoming a mainstream issue for middle-income families, particularly those who own property in London and the South East.

One of the main drivers of this rise is the government’s decision to freeze the nil rate band until 2030. While property prices have continued to climb, the thresholds have not kept pace. As a result, more estates are being drawn into the IHT net. Families who might not have thought of themselves as especially wealthy are now finding that simply owning a home in or around London can be enough to create a significant tax liability.

A well-structured estate plan can make an enormous difference. Trusts remain a valuable tool, particularly for blended families or where asset protection is important. Lifetime gifting can be highly effective, but only if done with a clear understanding of the rules and potential pitfalls. Life insurance written in trust is another way to help ensure beneficiaries can meet tax liabilities without being forced to sell valuable assets.

It is vital that clients review their affairs regularly. Many are surprised to find that rising house prices alone have pushed them into the IHT bracket. Planning is not about avoiding tax at all costs but about ensuring your intentions are fulfilled and your family is protected. At Laurus, we encourage every client to have an open conversation about their long-term goals. The earlier we have those conversations, the more options there are.

The predicted rise in tax revenue is also being driven by upcoming reforms to Business and Agricultural Property Relief, due in April 2026. These changes will reduce reliefs for many, particularly affecting business owners and landowners. Understanding these reforms now and building them into your planning strategy is crucial, rather than reacting when it is too late.

This forecast should not be seen as just another headline to be ignored. It is a timely reminder that inheritance tax affects more people every year. The sooner families seek advice, the more options they will have to protect what they have worked for and to pass it on in line with their wishes.