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The rising importance of estate planning amid Inheritance Tax changes

Date: 31 July 2025

2 minute read

Securing your family’s future in a shifting financial landscape

In recent years, estate planning has become an increasingly vital part of family financial strategy, yet many people still underestimate the complexity and implications of Inheritance Tax (IHT).

A recent report* found that while 77% of UK adults were aware of IHT, 71% didn’t understand IHT rules or what their beneficiaries might have to pay. More troublingly, just 27% of respondents planned on taking advice about how to deal with a potential IHT liability due on their estate.

 A lack of understanding about how IHT works and when it applies can lead to missed opportunities and unexpected tax bills for loved ones. Engaging with estate planning early opens the door for important family conversations, helping to clarify intentions, illuminate potential pitfalls, and ensure your legacy is truly protected.

Inheritance Tax on the Rise: Why Planning Matters

It’s not too late to revisit your estate and retirement strategies. Recent figures** underscore the urgency: the 2024/25 tax year saw HMRC raise a record £8.2 billion in Inheritance Tax, an increase of £800 million over the previous year. The trend has continued into the new tax year, with the Treasury collecting £780 million in IHT in April 2025 alone—up £97 million from April 2024 and marking the second-highest monthly IHT total on record.

The Office for Budget Responsibility’s Spring Statement forecasts IHT revenues reaching £9.1 billion in 2025/26 and over £14 billion by 2030. This increase is largely due to rising property and asset values, coupled with thresholds that have remained frozen. As a result, more households are being caught by IHT, often without realising the implications until it's too late. Since the freeze, IHT receipts have risen by more than 21%, leaving many estates facing six-figure tax bills that would have seemed unlikely just a few years ago.

Planning Ahead Pays Off

As record amounts are collected in IHT, more people are starting to realise the importance of understanding the rules and taking proactive steps. However, many still find the system confusing or are unaware of the options available to reduce potential liabilities. Effective strategies—such as gifting, making use of exemptions, setting up trusts, and pension planning—can help minimise the impact. By fostering open conversations and seeking advice early, families can avoid surprises and take meaningful action to protect what loved ones will ultimately inherit. In a climate of rising taxes and changing financial rules, having a clear, informed plan is more crucial than ever for securing your family’s future.

*Schroders Personal Wealth’s Family and Finances Report, 2025
** HMRC, 2025

Inheritance Tax planning & Estate Planning are not regulated by the Financial Conduct Authority.

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