Inheritance Tax Update September 2025

Parents across the country are racing to pass on the family home to their children in a bid to avoid big inheritance tax bills, fresh analysis reveals. 

 

But analysts have urged caution over the trend as homes can still be subject to inheritance tax if families do not adhere to strict stipulations. 

 

The number of estates subject to Inheritance Tax (IHT) has risen significantly, according to the latest annual statistics published by HM Revenue and Customs (HMRC). This trend reflects growing pressure on households as rising property values and frozen tax thresholds pull more estates into the IHT net. 

The Office for Budget Responsibility (OBR) forecasts total IHT liabilities for 2024/25 to rise 11.6% on the previous year to £8.4bn, while receipts data shows HMRC has so far taken £8.2bn for that period. The OBR also forecasts that in the current 2025/26 tax year IHT will raise £9.1bn. 

 

Land Registry data show between a million and 1.2 million homes are sold in Britain each year – and 8% to 25%, roughly 130,000 properties of these are given away without any money changing hands. In 2023, this number increased to around 152,000 and 2024 saw this figure close to 220,000. 

 

It is worth noting that assets given three years before death are taxed at 40pc, and gifts made between three and seven years before death are subject to tapering. 

Research by Standard Life found nearly a third of savers are considering giving away money to family members more regularly to reduce their inheritance tax liabilities. A further one in five were planning to buy an annuity to avoid a large death duty bill. 

 

Standard Life’s retirement savings director, Mike Ambery, said: “While it’s natural to consider how to minimise inheritance tax liability through strategies like increased gifting, it’s important that people consider their own retirement incomes and remember that pensions need to last for the whole of retirement.