Inheritances in the UK have just hit a new milestone, but not in a good way. HMRC collected £6.7 billion in inheritance tax (IHT) during the 2022–23 tax year, up 12% from the previous year. That’s £710 million more taken from estates, marking a record high in IHT receipts.
Why the jump? Property values are up, but tax thresholds haven’t moved. The nil-rate band – the portion of an estate exempt from tax – has been frozen at £325,000 since 2009. It’s not set to increase until at least April 2030. In the meantime, inflation and rising house prices are quietly dragging more families into the IHT net.
🔗 https://www.gov.uk/inheritance-tax
What’s This Got to Do With Property Auctions?…
Everything.
If you own property, especially if it’s unencumbered or part of a portfolio, you are more likely than ever to be impacted by IHT. A growing number of people are rethinking how they manage their estates. For some, it means gifting sooner, and for others, it’s about selling property to get the cash in hand before the taxman takes it.
That’s where property auctions come in. Auctions offer a fast, transparent, and often tax-savvy way to handle property sales, particularly in estate planning, probate, or inheritance management. Selling at auction can help executors and beneficiaries move quickly, realise true market value, and sometimes reduce future IHT exposure by shrinking the estate ahead of time.
The Hidden Numbers Behind “Only 1 in 20”
Officially, only 4.62% of deaths in the UK triggered an IHT bill in 2022–23. That’s up from 4.39% the year before, a noticeable rise, but still a small-sounding percentage. However, many financial experts argue that this figure masks the actual impact on families.
As Nicholas Hyett from Wealth Club explains, the “1 in 20” stat is skewed because transfers between spouses are tax-free. So if one partner dies and leaves everything to their spouse, there’s no IHT due yet. Only when the second partner passes is the full estate assessed for tax. At that point, the 40% IHT rate kicks in on anything above the threshold (potentially £650,000 if both nil-rate bands are combined).
The bottom line? Far more families will ultimately be affected by IHT than headline numbers suggest.
Families Are Wising Up and Acting Sooner
As the tax burden grows, more people are taking advice and acting before it’s too late. That often includes:
• Lifetime gifting: Giving assets to children or grandchildren.
• Setting up trusts: These can be challenging but can offer protection and flexibility.
• Downsizing: Selling off high-value properties to free up cash and reduce the size of the estate.
• Selling early via auction: Particularly for inherited or surplus properties that do not need to saty in the family.
Auctions offer a practical, quick solution in many of these scenarios, especially when more than one heir is involved or where the estate needs to be liquidated quickly and cleanly.
Auctions as an Estate Planning Tool
More families are turning to property auctions as a route to sell. Here’s why:
• Speed: From listing to sale can take just a few weeks. Completion typically follows within 20 working days.
• Certainty: The buyer is legally committed once the hammer falls. There’s no chain, no gazumping, and no lengthy negotiations.
• Market-driven price: The competitive nature of auctions can often push the final sale price well above reserve, particularly for in-demand properties.
• Transparency: Buyers bid in the open. There’s no smoke and mirrors.
This is a powerful tool for executors. For homeowners concerned about leaving behind a tax burden, it’s a clean way to convert assets into liquid funds, potentially avoiding future tax complications for their heirs.
What’s Next?
The Office for Budget Responsibility forecasts IHT revenues to hit £9.1 billion in 2025–26 if no changes are made. That’s nearly double what was collected just five years ago.
Meanwhile, murmurs of future reforms continue. One area likely to face scrutiny is the gifting regime. If the Treasury tightens the rules on tax-free gifts during someone’s lifetime, that could close off a major planning avenue. This is why many families are acting now, even though the rules are still unclear.
Final Word
Inheritance tax isn’t just a problem for the ultra-wealthy anymore. Middle and upper-middle-income families with modest property holdings are caught in the crossfire.
If you’re sitting on property and haven’t considered how it affects your estate, now’s the time to look ahead. Auctioning might not just be about getting a fair market price – it could be about protecting what you’ve worked for.
