The Office for Budget Responsibility (OBR) has increased its estimate on inheritance tax (IHT) receipts between 2024/25 and 2029/30 to £66.8bn, its Spring Statement forecast has revealed.

This represents an increase of £2.4bn compared to its previous estimate at the Autumn Budget in October.

Relative to the October forecast, IHT take was forecast to be £100m higher in 2024/25, and an average of £500m a year higher until the end of the decade, reaching £14.3bn in 2029/30.

Around £2.5bn of the increase in 2029/30 was due to the policies announced in the government’s Autumn Budget, the OBR noted.

It said the changes in its forecast were largely driven by higher in-year outturn, while higher cash deposits and property prices helped offset fewer projected deaths over the forecast.

IHT receipts were forecast to raise £8.4bn in 2024/25, up by 11.6 per cent compared to 2023/24, which the OBR said was primarily driven by higher asset prices in H2 2024 and frozen tax-free thresholds.

“The OBR has substantially upgraded its predictions for the revenue it believes IHT will raise compared to the Autumn Statement when it introduced significant reforms to the regime,” stated Utmost Wealth Solutions head of UK technical services, Simon Martin.

“It has added an estimated £0.5bn per year between 2025/26 and the end the decade which it attributes to higher cash deposit and property valuations.

“Further analysis of the impact of the widening scope of the IHT regime are undoubtedly also likely to be driving this uptick in receipts. It sets the scene for continued demand for professional advice as high-net-worth clients look to understand how they may be impacted.”

Hargreaves Lansdown head of retirement analysis, Helen Morrissey, added: “The surge is down to a variety of factors including frozen thresholds. However, from 2027 there is an extra boost as pensions are expected to be included in people’s estates for IHT. It’s a move that looks set to drag even more families into the IHT net.

“The reform has been greeted with concern by many retirees, some of whom were taking advantage of current rules to pass on their pension wealth to their families when they die.

“People with a looming liability can mitigate it by gifting away assets while they are still alive. Gifts of any value pass out of your estate for IHT purposes after seven years so many will look to move now to get the clock ticking.

“Others will make use of the variety of gifting allowances such as the annual exemption worth £3,000 to reduce their estate. These can be very useful, but it is important that people do not give too much away to their family now and potentially leave themselves short of cash later in retirement.”

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