Transact IHT Index Reveals Dramatic Rise in Households Facing Inheritance Tax Liability by 2027

• Households potentially liable for IHT to jump from 1.6 million to 5.1 million by 2027.
• Total taxable wealth to quadruple from £472bn to £1.9trn.
• One in four households in London and the South-East projected to exceed the £1m threshold.

The latest Transact Inheritance Tax (IHT) Index reveals a fundamental shift in the UK’s estate planning landscape, as upcoming reforms are set to bring millions more estates within the scope of inheritance tax (IHT) from 2027¹.

The Index, first launched in 2022, tracks changes in British household wealth using data from the Office for National Statistics’ Wealth and Assets Survey. Its 2025 edition demonstrates the impact of the forthcoming inclusion of pension wealth in estate valuations, due to take effect from April 2027.

A reversal in trend

Until now, inheritance tax exposure had been easing. Excluding pension wealth, the proportion of households potentially liable for IHT fell from 9.4% in 2014–16 to 6% in 2020-22, largely because of the introduction of the residence nil rate band (RNRB). The 2027 reforms will reverse this progress in a single step.

Scale of the change

The number of households projected to fall into scope will more than triple, from 1.6 million to 5.1 million. At the same time, the total value of estates subject to potential liability is expected to rise fourfold, from £472 billion to £1.9 trillion. Regional disparities are pronounced. London and the South East will be hardest hit, with more than a quarter of households in both regions projected to exceed the £1 million threshold.

Low awareness and growing demand for advice

Despite the scale of the change, public understanding remains limited. A nationally representative survey of 1,500 people, conducted by Trajectory and included in the Index, found that fewer than 30% of homeowners are fully aware of the 2027 reforms, while a third are completely unaware, despite pensions and property together accounting for the bulk of household wealth².

Advisers responding to the Index report rising client demand for estate planning strategies³. Trust-based planning, gifting from surplus income and investment bonds are already emerging as leading tools to manage liabilities. Almost half of advisers believe the changes will also create broader opportunities for intergenerational planning, though with added complexity.

Andrew Cullen Jones, Chief Development Office at Transact commented:

“The 2027 reforms represent a fundamental transformation in estate planning. With a dramatic increase in both the number of affected estates and the scale of potential liabilities, individuals, particularly those with significant pension assets, must reassess their financial strategies. Steps such as lifetime gifting, reviewing pension withdrawal strategies and the use of investment bonds in combination with careful trust planning can help mitigate the impact.

Professional financial advice will be essential to navigate this evolving landscape and to ensure that families can maximise the inheritance passed on to future generations.”

Notes to editors

1. The Transact Inheritance Tax (IHT) Index monitors changes in British household wealth since 2006, using data from the Office for National Statistics’ Wealth and Assets Survey.
2. A Trajectory survey of 1,500 UK adults (April 2025)
3. Transact survey amongst 260 advisers (August 2025)