With a record £936m IHT paid in September, Spencer Gardner Dickens warns of a stealth tax
Frozen thresholds and increasing asset prices are leading to families paying more Inheritance Tax (IHT) by stealth, warns Spencer Gardner Dickens (SGD), as September receipts reached a historic £936m.
When compared to September 2025, IHT payments in the same month year-on-year increased by £265 million, soaring to a record £936m and surpassing the previous monthly high of £871m set in June 2026.
The rising receipts suggest that IHT is becoming an increasingly dependable source of revenue for the Treasury, despite its widespread unpopularity.
Frozen tax-free thresholds mean the rising value of houses, investments and other assets are more likely to push estates outside of tax relief bands and into the net of IHT.
While the rate of IHT remains at 40%, taxpayers become subject to more tax because thresholds have not risen in line with inflation. This mechanism is known as ‘fiscal drag.’
Matt Stambach, private client tax director at SGD, highlights how this stealth tax works in practice.
He said: “The standard nil-rate band of £325,000 and the residence nil-rate band of £175,000 have both been frozen since 2009 and aren’t due to be updated until April 2031.
“An estate may have been worth £300,000 15 years ago, but the same assets could now be worth north of £500,000 due to property inflation and investment growth.
“The stealth element comes from the threshold remaining unchanged, while the price of assets rising sharply across the board.”
Matt explained that September’s record receipts are not an isolated event, as IHT revenue has been steadily climbing for several years.
With a growing number of families impacted, he asserted that IHT can no longer be viewed as a tax on the very wealthy.
Instead, many middle-income families have paid, or are due to pay, IHT, particularly in areas where house prices have risen substantially.
Matt said: “It is common to unconsciously downplay the value of your assets and assume that you will not be liable for IHT.
“A family home, pension and a modest amount of savings may not have created a tax liability a generation ago, but this may no longer be the case.
“To avoid beneficiaries being hit with a steep tax bill, you should review your IHT exposure with a professional and explore the estate planning opportunities available.”
Matt referenced lifetime gifts as a possible remedy to the increasing IHT exposure faced by many families.
He said: “Gifts to loved ones during a lifetime can help to mitigate an IHT bill. Donations made more than seven years before a death can fall entirely outside the scope of IHT.
“If the donor dies within seven years, however, the gift is then brought back into the net of the taxable estate, although taper relief may apply.”
Taper relief is applied in line with how long the donor survived after a gift was made, with greater tax relief the longer the period between the gift and death.
Aside from lifetime gifts, Matt recommended families also utilise their annual £3,000 tax-free gift exemption as an effective estate planning strategy.
Matt said: “Early advice from an accountant can help minimise IHT liabilities in the long term by ensuring gifting arrangements are set up to deliver the greatest tax saving.
“Even if you don’t think you are due to pay IHT, it is worth speaking to a professional to double-check your exposure and how your assets are structured.
“The sooner families identify a potential liability, the more opportunities are generally available to minimise tax receipts and protect wealth for the next generation. Speak to an SGD adviser today.”