Middle-class UK families to be hit by more ‘stealth taxes’
New figures from HM Revenue & Customs (HMRC), analysed by wealth manager Quilter, reveal a sharp rise in inheritance tax (IHT) and capital gains tax (CGT) receipts, driven by long-standing freezes on tax thresholds and recent policy changes.
The group warn sthat these “stealth taxes” are increasingly ensnaring middle-class households, rather than just the ultra-wealthy.
For the 2025/26 tax year, IHT receipts had already reached £7.7 billion as of February 2026, surpassing the full 2023/24 total of just under £7.5 billion with still one month left in the period.
This compares to £8.25 billion collected in the full 2024/25 tax year, putting the current year on track to potentially match or exceed that record.
The surge is largely attributed to fiscal drag caused by the nil-rate band remaining frozen at £325,000 since 2009. Rising house prices, asset inflation, and accumulated savings have pushed more estates over these unchanging thresholds.
“HMRC’s February figures show again how frozen thresholds are driving the tax take. What was once labelled a stealth tax has been deployed for so long, and so consistently, that it is no longer remotely subtle,” said Shaun Moore, tax and financial planning expert at Quilter.
Further pressure on families comes from recent reforms. From April 2025, reliefs for agricultural and business property were capped. 100% relief now applies only up to £2.5 million per individual (or £5 million for couples), with excess assets receiving just 50% relief.
Looking ahead, from April 2027, unused pension pots will be brought into the IHT net, which experts predict will dramatically increase liabilities and affect even more middle-class estates that have built up significant retirement savings.
CGT receipts are also soaring under a tighter regime. In February 2026 alone, receipts hit £2.7 billion, nearly double the £1.4 billion from February 2025.
For the period April 2025 to January 2026, total CGT take reached £18.8 billion, up significantly from £11.9 billion in the equivalent prior period.
This reflects higher rates on many assets, a reduced annual exempt amount, and more disposals being pulled into the tax net – changes that impact investors, second-home sellers, and those realizing gains on shares or other assets.
Broader HMRC data for April 2025 to February 2026 show gross tax and National Insurance receipts at £860.7 billion, up £72.6 billion year-on-year, with PAYE income tax and NICs also rising sharply by £43.9 billion to £428.8 billion over the same period, again fuelled in part by frozen personal allowances and higher-rate thresholds extended until at least 2031.
