As May ushers in longer days, fresh blooms, and the optimism of spring, many households across the UK find themselves reviewing their finances and legacy plans with a renewed sense of purpose. Yet amid the season’s lightness, one figure casts a long shadow: Inheritance Tax receipts have hit a record £8.2 billion for the 2024/25 tax year.

At Clarke & Wright, we believe spring is the perfect time to not only refresh your home and garden but also to reassess your estate planning. With IHT thresholds frozen and new rules looming on the horizon, proactive planning is more critical than ever. In our May newsletter, we explore what’s behind this record-breaking tax haul and what steps individuals and families can take now to mitigate its growing impact.

Inheritance Tax Hits Record High of £8.2 Billion for 2024/25

Inheritance Tax (IHT) receipts reached a record high between April 2024 and March 2025, with HM Revenue & Customs collecting £8.2 billion – an £800 million increase on the previous year. This 10.8% rise marks yet another milestone in the Treasury’s growing annual IHT intake.

A key driver of this upward trend is the continued freeze on tax thresholds, which are set to remain in place until at least 2030. As asset values – particularly property – continue to climb, more estates are being drawn above the IHT threshold. Additional policy changes on the horizon, including the inclusion of unspent pension pots in IHT calculations from April 2027 and reduced reliefs for agricultural and business assets, are expected to compound this growth in future tax receipts.

With the broader economy under strain, there is also speculation that the government may pursue further tax reforms to bolster public finances, making inheritance tax planning more relevant than ever.

Interestingly, recent market downturns may offer some relief. If the value of an estate, especially those heavily invested in equities, has dropped since the date of death, executors may be eligible for a refund via HMRC’s “loss on sale” relief. This allows a revised valuation to be submitted if assets are sold for less than their probate value.

Forecasts from the Institute for Fiscal Studies (IFS) suggest the proportion of estates liable for IHT could reach a 50-year high by 2029–30. While historically a modest contributor to the UK’s tax base, Inheritance Tax (IHT) is increasingly affecting middle-income households. This shift highlights the importance of thoughtful estate planning, especially given the potential for changes to gifting rules and reliefs. Leveraging exemptions, setting up trusts, and acting in accordance with current rules can help mitigate future liabilities.

Property wealth, in particular, is becoming a central consideration in estate planning. As house prices rise and tax bands remain frozen, more families are at risk of Inheritance Tax (IHT) exposure. There’s a growing recognition that housing assets must be managed not just for retirement, but as part of a broader intergenerational wealth strategy.

In today’s environment, early and proactive financial planning is essential. Lifetime gifting, sensible use of housing equity, and regular will updates are becoming critical tools to protect family wealth. With inflation eroding the value of tax thresholds, planning ahead can make all the difference in safeguarding your estate for future generations.

Pension Wealth Being Spent Sooner as Inheritance Tax Changes Loom

With significant changes to inheritance tax (IHT) rules on the horizon, many older individuals with sizable pension pots are increasingly choosing to use their retirement savings during their lifetime, rather than risk passing on a larger tax burden to their heirs. This shift in behaviour follows the government’s announcement that, from April 2027, unspent pension savings could be brought within the scope of IHT.

The forthcoming change is reshaping how people approach both retirement planning and intergenerational wealth transfer. Where pensions were once seen as a relatively tax-efficient way to pass on wealth, this strategy is now being reassessed. Individuals are showing greater interest in making financial gifts while alive, not only to enjoy their wealth but also to support loved ones and mitigate potential tax implications.

One visible outcome of this change in approach is the increasing prevalence of large financial gifts from parents and grandparents, particularly to help the next generation onto the property ladder. Contributions toward home deposits or property upgrades have become increasingly common, as older generations seek to provide meaningful support in real time rather than waiting until after their passing.

New figures reflect this shift: financial assistance from parents for home buying – whether as gifts or loans – reached £9.3 billion in 2024, up sharply from £5 billion in 2019. This trend underscores a broader reevaluation of wealth planning, as families adopt a more proactive and strategic approach to preserving and transferring assets.

UK Adults Making Wills at Record Levels, But Gaps Remain Among the Under-55s

For the first time since IRN Legal Reports began tracking will-writing habits, more than 40% of adults in the UK now have a will – a notable benchmark in public participation with end-of-life planning.

The 2025 edition of the UK Wills & Probate Consumer Research Report reveals that 41% of UK adults – around 22 million people – have formalised their final wishes, an increase from 38% in 2024. However, the data also show that procrastination remains a significant obstacle. Among those without a will, over half (54%) cited “not getting around to it” as their primary reason, with individuals under 55 particularly lagging in the uptake of wills.

Interest in complementary services is on the rise; for example, 22% sought advice on Lasting Power of Attorney, up from 15% in 2023.

Digital estate planning is gaining momentum as well, with 39% of respondents stating they’ve included – or plan to include – digital assets and legacies in their wills, up from 36% in the previous year. Meanwhile, charitable bequests have dipped slightly to 24%, potentially reflecting shifting priorities or reduced visibility of giving campaigns.

Probate itself is still perceived as straightforward for those with clear-cut estates and well-written wills. Yet, 45% reported that the process took longer than anticipated, up from 40% in 2024. The trend toward digital services is evident, with 59% opting to use the Ministry of Justice’s online probate application portal.

The findings are based on a nationwide survey conducted for IRN Legal Reports, covering 680 adults with a will and 270 individuals involved in the probate process. The report also incorporates responses from those who have yet to make a will, providing insight into the barriers and attitudes.

Widespread Confusion Over Valid Wills in the UK, Reveals New Survey

A recent YouGov survey has revealed a striking gap in the public’s understanding of what legally constitutes a valid will in the UK.

Out of the 2,000 adults surveyed, nearly half (48%) were unaware of a key legal requirement: that a will must be signed in the presence of two independent witnesses – individuals who are not beneficiaries named in the document – for it to be legally binding.

Alarmingly, misconceptions are particularly prevalent among younger respondents. One in five individuals aged 18–24 mistakenly believe that leaving a video message would be legally accepted as a will. Even more concerning, 10% of that age group think that a simple audio or text message could suffice. Although belief in these digital formats declined with older age groups, a noticeable number still considered them more viable than email.

Creating a legally valid will is crucial to ensure that your wishes are respected and your estate is distributed properly after your death, including your funeral preferences. Yet a surprising number of people are unaware that signing a will must be witnessed by two individuals who are not beneficiaries.

This lack of understanding continues to fuel common misconceptions about will-making and may lead to an increase in disputes. Many people mistakenly believe that digital communications, such as videos, voice notes, or text messages, can serve as legal testamentary documents. However, this is not the case.

Relying on these assumptions can lead to serious legal and emotional consequences. Wills that don’t follow the legal requirements may be declared invalid, potentially exposing families to fraud, intra-family conflict, and unintended asset distribution.

To be legally valid under UK law, a will must meet several strict criteria:

• It must be in written form – either typed or handwritten.

• It must be signed and dated by the testator, the person making the will.

• The signature must be witnessed by two individuals who are not beneficiaries of the will.

• The testator must have the mental capacity to make the will and do so voluntarily, without coercion.

Despite ongoing developments in digital communication and growing concerns around cybersecurity and deepfakes, UK law remains clear: only traditional, paper-based wills that meet these formalities are legally recognised.

Executors May Offset IHT Liabilities Amid Market Turbulence

The recent volatility across global stock markets, triggered by sweeping tariff measures introduced by the US President, could offer a strategic opportunity for estate executors to reduce inheritance tax (IHT) liabilities.

One potentially valuable but often overlooked tax relief is known as loss on sale relief. This mechanism can be beneficial during periods of declining equity markets.

IHT is calculated based on the value of assets at the date of death. However, if quoted shares are later sold for less than their probate valuation, executors can apply for this relief, allowing the sale price to replace the higher valuation at the time of death for IHT purposes. This adjustment may result in a partial tax refund.

To qualify, the total value of all qualifying share sales within 12 months of the date of death must result in an overall loss. Executors then have up to four years from the end of that 12-month window to make a claim, even if the estate has already been fully administered.

The claim process involves submitting the relevant HMRC form, along with documentation that shows both the original probate value and the eventual sale price of the shares. In times of market instability, this relief can significantly reduce the estate’s final tax bill.

Spring into Action: Plan Ahead for Your Financial Future

As we embrace the vibrant energy of May and the promise of spring, it’s an ideal moment to give your estate planning the attention it deserves. At Clarke & Wright, we know that the evolving landscape of inheritance tax and financial planning can be overwhelming, but proactive steps now can help you navigate these challenges. Whether it’s updating your will, reviewing asset management strategies, or exploring tax relief options, our expert team is here to guide you through the process. Let this season of renewal inspire a fresh approach to securing your financial future. Contact us today to take the next step in protecting your legacy.