Inheritance tax update: September 2026 and third quarter

• Inheritance tax (IHT) receipts for September 2026 hit a new record, surpassing June’s £871 million, with £936m raised. 

• IHT receipts for the third quarter to £2.4 billion, up £229m on Q2 2025

• Inheritance tax receipts from October 2025 to September 2026 are £8.8bn, up £417 million from the same period last year

HMRC notes that the record receipts in September may be a timing issue, offsetting the slump in August 2026. Nevertheless, the £2.4bn raised in the third quarter is up 11% on the same period in 2025.

With £6.6bn raised in the first nine months of the year, it seems highly likely IHT receipts for 2026 will surpass 2025’s total of £8.5bn. For the current tax year, meanwhile, IHT has already raised £4.7bn, up £0.3bn on the same period last year.

Even now, IHT remains a relatively modest revenue raiser for the government, with Q3 receipts accounting for just 1% of all HMRC receipts. However, HMRC expects receipts to continue climbing in coming years due to increasing deaths with estates liable to the tax, rising asset values, and freezing of nil rate band thresholds.

The proportion paying IHT remains a small minority, but in the 2023/24 tax year reached its highest since 2006/07.

With the inclusion of pension savings in estates from 6 April 2027 and the reductions in agricultural property relief (APR) and business property relief (BPR) from this April, that proportion will continue to grow. It is probably still too early to say that the records in receipts in June and September are partly due to a reduction in reliefs, but they do help ensure the trend is only going to be one way: more estates paying and paying higher bills.

That is likely to mean the tax has increasing political salience in future and perhaps explains the Conservatives’ commitment earlier this month to scrap IHT on family homes – essentially making the residence nil rate band (currently £175,000 or £350,000 for a couple) unlimited. The party has also said it would increase the threshold on which IHT is payable on other assets (£325,000 transferable between couples, currently) to £500,000.

Together, the changes would mean a couple could pass on £1 million and their residential property tax-free.

The plans stand in contrast to proposals floated by Labour in the Summer to replace IHT with a flat 10% death tax on all estates, with few exceptions or allowances, helping to fund the Prime Minister Andy Burnham’s plans for a National Care Service. However, this would also have, in fact, benefited the wealthiest most.

IHT has long been deeply unpopular with the public and, as more estates are dragged into paying it, while the government continues to look for new ways to raise revenue, we’ll continue to see proposals for reform. In the meantime, however, with an election perhaps more than two years away, we must deal with the rules as they are – the growing importance of tax planning for families seeking to secure their future.