New figures released by HMRC today show that the number of estates liable to pay inheritance tax rose by 13% in 22-23 vs the previous year.

In total, there were 31,500 taxpaying IHT estates in 22-23, meaning 4.62% of UK deaths resulted in an inheritance tax charge during the year, an increase of 0.23 percentage points since the previous year.

IHT tax liabilities during the year reached £6.7bn, a 12% rise versus the prior year.

The rise in the number and proportion of estates being liable to inheritance tax comes ahead of significant reforms to the regime due to come into force next year and which are likely to see many more estates pulled into the IHT net.

From April 2026, the IHT relief available for assets qualifying for business relief (BR) and agricultural relief (AR) will be capped at £1m with the excess attracting 50% relief - in effect producing a 20% tax rate.

In addition, listed shares treated as unquoted shares - including AIM shares – will only qualify for 50% rather than 100% IHT relief.

Further changes due in April 2027 will apply inheritance tax to unspent pensions pots. This is due to impact around 8% of estates.

According to the OBR’s latest Economic and Fiscal Outlook published in March 2025, inheritance tax (IHT) receipts are forecast to raise £8.4 billion in 2024-25, an 11.6 per cent increase on 2023-24 largely driven by higher asset prices, combined with frozen tax-free thresholds. Receipts are then forecast to rise to £14.3 billion in 2029-30, with around £2.5 billion of the rise in 2029-30 due to the IHT reforms announced in the October 2024 Budget.

Ben Handley, a tax partner at BDO said:

“While these latest figures show a fairly modest rise in the number of estates subject to inheritance tax in 22-23, we’re likely to see many more people dragged into the IHT net when seismic changes to the regime come into force from 2026.

“From next April, the capping of business and agricultural relief to £1m of qualifying assets will bring many business and farm owners into scope for IHT for the first time. These latest figures for 22-23 show that families of business and agricultural owners benefitted from £5.8bn of inheritance tax relief but this will reduce significantly from April 2026 onwards.

“Draft legislation published last week shows the Government is determined to push ahead with its IHT proposals despite strong pushback from many in the business and farming community.

“The publication of draft legislation has also dashed hopes that the £1m allowance for agricultural and business relief would be made transferable bringing it into line with the nil-rate band and residential nil-rate band.

“Further changes due in April 2027 will apply inheritance tax to unspent pensions pots. These changes will impact around 8% of estates – and add significant administrative burdens to families at a difficult time.

“Taken together, these reforms mean it’s even more important for people to plan for the future and determine how to pass on their assets to the next generation in an efficient way.

“This is particularly true for business and farm owners. If their wills aren’t reviewed and updated before April 2026, their beneficiaries could risk losing out on important reliefs.”