Are more people now potentially liable for Inheritance Tax?

Inheritance Tax (IHT) has traditionally been seen as a concern for the very wealthy. Yet as tax specialists Craig Walker and Mark Trevena discuss in the latest Accountable by Shorts podcast episode, that perception increasingly misses the mark. A growing number of ordinary households are now finding themselves potentially liable for IHT; not because they suddenly became richer, but because the system around them hasn’t kept pace with economic reality.

Below, Craig and Mark break down why more people are drifting into IHT liability today, drawing directly from the insights shared in the episode.

1. A frozen tax threshold is pulling people in

The biggest driver is the long‑standing freeze of the £325,000 nil‑rate band, unchanged since 2009. For 17 years, that figure has stood still while the value of people’s estates (especially their homes) has climbed significantly. Many individuals who don’t see themselves as wealthy now exceed the threshold purely because of this mismatch.

In effect, you don’t need to be affluent to fall into IHT; you just need to have lived through rising house prices.

2. Rising property values quietly push up estate values

People often underestimate their true wealth. They think of "assets" as cash, jewellery or investments. However, your estate includes everything, from your home to your bank accounts to your personal belongings. For most, simply adding up the value of their property and savings is enough to tip them over the Nil Rate Band threshold.

As Mark points out in the podcast, "wealthy" for IHT purposes is not super‑yacht wealthy. It’s just "crossed the threshold" wealthy, which now applies to far more families than before.

3. Worldwide assets (and crypto) are still taxable

A growing number of people hold assets in different forms: foreign bank accounts, international investments or cryptocurrency. But as Craig explains clearly in the podcast, UK residents are taxed on their worldwide assets.

Putting holdings offshore or into crypto does not remove them from your estate for IHT purposes. This surprises many people who assume these assets sit outside the UK tax system. Simply put, they don't. All of it counts. 

4. Misconceptions stop people using simple planning tools

Inheritance Tax is one of the easiest taxes to reduce when planned for, yet many people still fail to act. Common reasons include:

• assuming 'I’m not wealthy enough for IHT to apply'

• believing a simple Will solves everything

• trusting informal advice from friends

• putting off estate planning because the topic feels uncomfortable

The sooner people seek advice, the more options they have. Waiting too long means the seven‑year gifting rule may no longer be practical, and simple strategies become harder to implement. Craig and Mark have provided an overview of the common IHT misconceptions that stop people from planning properly, and could ultimately hinder them in the long term. 

5. The 2027 pension change will bring even more people into the net

One of the most significant points is the rule change coming in April 2027, which will bring many pensions into the taxable estate for the first time.

For years, pensions have been a core IHT planning tool precisely because they sat outside the estate. This shift is a considerable change, and it will push many people who never previously had an IHT problem into taxable territory, especially those with long careers and multiple pension pots.

This change alone could be enough to tip hundreds of thousands of additional estates over the threshold.

More people liable, but more opportunities to plan

While more households are now drifting into the IHT bracket, the message is clear: the best time for anyone to start estate planning is now.

Whether it’s gifting strategies, professional Will drafting, using exemptions effectively or simply understanding your estate’s value, early and informed planning remains your strongest defence.

If you want a deeper dive into this topic, the latest Accountable by Shorts podcast episode covers all of these IHT issues and more. For those ready to be more IHT-efficient, Shorts' Personal Tax Planning team can consult with you on your goals and build a plan that helps you and your family saving today, and in the future.