Number Of IHT Liable Estates To Increase By 50% To Over 37,000 By 2027

The number of estates in the UK subject to Inheritance Tax (IHT) will exceed 37,000 by 2027 and result in a total bill of almost £9bn - according to a new report by Irwin Mitchell's Private Client Advisory based on findings from an HMRC Freedom of Information request.

The predictions are based on previously unseen Government statistics which cover 177,000 IHT estates across all 121 UK postcodes.

The forecasts have been adjusted to account for changes announced in Rachel Reeves’ Budget last year which saw the threshold freeze extended until 2030 and changes to Business and Agricultural Property Relief from April 2026.

Key findings:

• Nine out of 10 UK postcodes will have more estates liable for IHT in 2026/27 compared to 2021/22.

   

• The total amount of IHT liable in the UK is predicted to reach £9bn by 2026/27 rising from £5.5bn in 2021/22.

   

• Total amount of IHT in Greater London is predicted to grow by 54% between 2022 and 2027, increasing to £2.6bn a year.
• In 2026/27 Greater London could have 9,400 estates that are liable for IHT - representing a 43% rise compared to 2021/22.

   

• Ten UK postcodes expected to see the number of IHT liable estates double between 2021/22 and 2026/27.

   

• Average IHT bill in Greater London expected to be £275,000 by 2026/27 and even higher in Inner London (£340,000)

   

• Leeds, Manchester, and Birmingham are all seeing double-digit increases in the percentage of estates liable for Inheritance Tax.

  Expert Opinion

  "The increase in Inheritance Tax liabilities across the UK is a significant concern for many families. Our findings highlight the urgent need for individuals to seek professional advice to navigate these changes and plan effectively for the future. With the threshold freeze extended until 2030 and changes to Business and Agricultural Property Relief from April 2026, it's more important than ever to understand the implications and take proactive steps to mitigate the impact on estates." Andrea Jones, National Head of Irwin Mitchell Private Client Advisory team

From April 6, 2026, significant reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR) will take effect, capping full 100% relief at £1 million for combined qualifying assets, with amounts above this threshold receiving only 50% relief. AIM-listed shares will also see reduced BPR eligibility. The Office for Budget Responsibility estimates that 130 estates will be affected by APR changes and 1,440 by BPR, generating an additional £200 million in tax revenue in 2026/27.