22 May 2026
Inheritance Tax drops but pressures building ahead of major regime change
“Inheritance Tax receipts for April 2026 are £0.7 billion, £65 million lower than the same month last year, representing a rare drop in IHT receipts.
“However, this set of figures marks an important milestone, as it is the final April in which pension wealth remains outside the scope of IHT. From April 2027, unused pension pots will be brought within the taxable estate, fundamentally changing how wealth is assessed at death.
“That shift is likely to have a profound effect on future receipts. Pensions have long been one of the largest assets held outside the estate, and bringing them into scope significantly increase the number of people paying what was once a tax for the very wealthy.
“As a result, next tax year IHT receipts are expected to rise sharply, with these figures likely to look modest in hindsight. Combined with frozen thresholds and ongoing pressure from property values, the trajectory for IHT remains firmly upwards, placing even greater emphasis on early and proactive estate planning. Making use of the meagre but still useful gifting allowance and taking a holistic view of your wealth remains paramount. ”
Income tax and NICs continue to drive receipts higher
“PAYE income tax and National Insurance contributions receipts for April 2026 stand at £52.5 billion, £4.7 billion higher than the same month last year, continuing the upward trend seen throughout the previous tax year.
“This reflects the ongoing impact of frozen income tax thresholds. Even as wage growth begins to moderate in real terms, fiscal drag remains firmly in place, pulling more workers into higher tax bands and increasing the overall tax take.
“The start of a new tax year typically offers a reset for household finances, but that is increasingly not the case. For many, higher nominal pay is being offset by a rising tax bill, meaning it will feel like more of the same pressure rather than a fresh start.
“With thresholds frozen until 2031, the composition of the taxpaying public will look very different by the time we reach the next decade. There will be a significant increase in the overall number of taxpayers, alongside a sharp rise in higher and additional rate taxpayers, as wage growth pushes people over thresholds they may never have crossed if the freeze hadn't happened.”
Capital Gains Tax drop shows how volatile the tax can be
“Capital Gains Tax receipts for April 2026 are £165 million, £29 million lower than April last year, showing how volatile CGT receipts can be from year to year.
“Overall though, receipts remain significantly elevated following the sharp reduction in the annual exempt amount and the increase in CGT rates on shares and other assets. Those changes have permanently raised the tax payable on gains and reshaped investor behaviour.
“Recent political discussion around aligning CGT rates more closely with income tax, as suggested by Wes Streeting, adds another layer of uncertainty. Even the prospect of further reform could influence behaviour, encouraging investors to accelerate disposals in the near term or become more cautious about crystallising gains altogether.
“Whether receipts climb steadily or become more volatile will depend on how investors respond to both the current regime and the direction of future policy. Capital Gains Tax is particularly sensitive to behavioural change. If the prevailing mood music from Labour leadership hopefuls signals a more punitive approach, new mitigation strategies are likely to emerge in response.”
