The average inheritance tax (IHT) bill for estates that incurred the charge stood at £231,000 in the 2023/24 tax year. During this period, 30,400 deaths in the UK led to an IHT charge, representing 4.72% of all UK deaths.
This figure marks an increase of 0.10 percentage points from the previous year, making it the highest proportion of estates paying IHT since 2006/07, when it was 5.96%. Total inheritance tax receipts reached £7 billion in 2023/24, a 5% increase compared to the prior year.
The Office for Budget Responsibility (OBR) reported that inheritance tax raised £8.4 billion in 2024/25. The OBR anticipates this figure will rise to £14.7 billion by 2030/21. This projected increase is attributed to factors such as fiscal drag, the £2.5 million cap on 100% agricultural property relief and business property relief introduced in April 2026, and the inclusion of pensions as part of an estate for inheritance tax purposes from April 2027.
The standard inheritance tax threshold is £325,000, which can increase to £500,000 if a home is given to children or grandchildren, provided the estate is valued under £2 million. Strategies to potentially reduce IHT liabilities include lifetime gifting, such as using the annual exemption of £3,000 per year, which can be carried forward for one tax year if unused. Gifts made during a person's lifetime may also be exempt from IHT if the donor lives for seven years after making the gift, though the tax rate can taper off after three years.