Inheritance tax receipts hit £2.1bn from April to June 2024/25 tax year, fresh figures published by HM Revenue and Customs (HMRC) show. This is £83m higher than the same period in the previous tax year, and continues the upward trajectory over the last two decades. Last full tax year it raised £7.499bn.

Inheritance tax remains firmly at the heart of the political debate given Labour Party’s pledge not to raise most of the other major sources of tax revenue, including Income Tax, National Insurance or VAT.

But a Labour inheritance tax raid on investments could trigger a stock market sell-off, analysts have warned.

Rachel Reeves, the chancellor, has been urged to abolish inheritance tax relief for shares in fast-growing companies in order to raise an estimated £1.6bn a year for the Treasury.

Reeves is under pressure to raise cash to fund Labour pledges. Cracking down on tax avoidance by large businesses and the wealthy was one of Labour’s manifesto pledges. Some experts have interpreted this as a sign the government could be looking at closing various inheritance tax loopholes.

However, a recent survey of Wealth Club clients suggested that an inheritance tax raid could be an unpopular move. Some 42% of respondents said that if they could make cuts to any one tax, it would be inheritance tax.

Nicholas Hyett, investment manager at Wealth Club, commented: “Inheritance tax remains a political hot potato. The new government has promised not to raise a whole host of taxes, but inevitably there are spending pledges that need to be met. That means those taxes that haven’t been officially ringfenced, including inheritance tax, are firmly in the spotlight.

“Reforms to non-dom rules are one potential source of an inheritance tax windfall, but with an estimated £100 billion being passed on in inheritances and gifts in the UK each year, there’s probably more in play if the government is determined to raise extra cash.

“That puts agricultural and business relief in the firing line. But, reforms need to be handled sensitively. Abolishing either completely would be devastating to family owned businesses and farms across the country, while reliefs for the AIM market, Enterprise Investment Scheme and Seed Enterprise Investment Scheme provide vital funding for Britian’s smaller companies. The optimum tax system should focus on the behaviours it encourages as well as the revenues it generates.”

Inheritance tax is charged on the value of estates worth more than £325,000, or £500,000 if a main property is passed down to direct descendents. Couples can share their allowances, meaning they can leave behind a maximum of £1m tax-free.