UK inheritance tax revenue growth has slowed in 2026, according to recent HMRC data reported by Law360. After years of consistent increases in receipts, the deceleration marks a notable shift in the trajectory of one of Britain's most politically contentious levies.
The slowdown arrives amid ongoing debate over the threshold freeze and rising property values that have pushed more estates into the inheritance tax net. For families with cross-border assets or those considering relocation, the trend raises questions about future policy direction and the attractiveness of the UK as a wealth domicile.
What
the revenue data shows
HMRC figures indicate that inheritance tax revenue growth has decelerated in 2026, though the Law360 report does not specify exact percentage changes or absolute amounts. The slowdown follows a multi-year period during which receipts climbed steadily, driven by frozen nil-rate bands (£325,000 since 2009) and rising asset values, particularly in property.
The nil-rate band has remained unchanged for over a decade, meaning inflation and property appreciation have gradually expanded the taxable estate base. The residence nil-rate band, introduced in 2017 and now capped at £175,000, offers additional relief for primary residences passed to direct descendants, but many estates still face the standard 40% rate on amounts above the combined threshold.
Implications for estate planning and relocation
For high-net-worth individuals and families with estates approaching or exceeding the £500,000 combined threshold (nil-rate band plus residence nil-rate band), the revenue slowdown may reflect increased use of trusts, lifetime gifts, or emigration. Anecdotal evidence from wealth advisors suggests that some families are accelerating succession planning or considering jurisdictions with lower or zero inheritance tax.
Italy, for example, levies inheritance tax at rates between 4% and 8% depending on the relationship to the deceased, with a €1 million exemption for direct heirs. Cyprus imposes no inheritance tax on estates, making it a popular destination for UK nationals seeking to preserve intergenerational wealth. Malta similarly offers favourable treatment, with no inheritance tax for non-domiciled residents on non-Maltese assets.
The deceleration in UK receipts does not necessarily indicate a policy change; it may instead reflect market dynamics, such as lower transaction volumes in high-value property or increased uptake of relief schemes. Nonetheless, for those evaluating long-term wealth structures, the trend underscores the importance of jurisdiction-specific estate planning.
UK
as a wealth domicile: what the numbers suggest
The UK's inheritance tax regime remains among the most stringent in Europe, with a headline rate of 40% and a relatively low threshold. The revenue slowdown in 2026 may signal that the policy has reached a point of diminishing returns, where behavioural responses, relocation, gifting, trust structures, begin to offset the fiscal gains from threshold freezes.
For expats and founders weighing the UK against alternative domiciles, the inheritance tax burden is a material consideration. The Libaros Freedom Score framework evaluates jurisdictions across five dimensions: tax burden, passport mobility, residence options, property rights, and lifestyle. On the tax dimension, the UK's inheritance tax regime scores below Mediterranean alternatives such as Cyprus, Malta, and Italy, where intergenerational transfers face lower or zero levies.
The 2026 revenue data, while incomplete, suggests that the UK's inheritance tax policy may be entering a new phase, one in which growth in receipts no longer tracks asset price inflation as closely as it once did. Whether this reflects policy fatigue, market correction, or strategic estate planning, the trend is worth monitoring for anyone with significant UK-situs assets or domicile ties.