Receipts from inheritance tax (IHT) and capital gains tax (CGT) will see a steep rise over the next 50 years as the UK population ages and wealth is transferred between generations, according to the Office for Budget Responsibility (OBR).

In its latest Fiscal Risks and Sustainability Report, the OBR projected IHT and CGT receipts will increase from 1.4% of GDP in 2030-31 to 2.2% by 2075-76 under its baseline scenario, driven by the proportion of people aged over 80 rising from 5% in 2025 to 12% in 2075. An alternative scenario, where wealth growth continues to outpace GDP, would see receipts reach 2.7% of GDP by 2075-76.

The href="https://assets.publishing.service.gov.uk/media/6a4cb4c74889d85e75ab40e0/E03599617_OBR_FRS_2026_Accessible.pdf">report , published today, warned the UK's public finances are on an unsustainable long-term path, with government debt projected to rise steeply from the 2040s unless future governments take action.

The Government body said acting sooner would require a less costly fiscal adjustment than delaying.

The OBR also forecast state pension spending will rise from around 5% of GDP to 9% over the period under current policies, reflecting population ageing and the triple lock, while income tax and national insurance (NI) receipts are expected to remain broadly stable as a share of GDP.

It worked on the assumption that the total population peaks at just under 73 million in the mid-2050s before falling to around 71½ million by 2075. The age structure of the population becomes older, with the median age rising from 40 to 49 between 2025 and 2075.

Commenting on the findings, Simon Martin, head of UK technical services at Utmost, said: "The OBR's latest report demonstrates how demographic changes in the UK are likely to accelerate wealth transfer over the coming years and drive increases in IHT and Capital Gains Tax."

Martin added: "The OBR notes the specific fiscal impact also arising from wealthier cohorts – particularly the 'baby boomer' generation – beginning to reach the end of their lives. The projections underline the immense value of financial advice and the growing role that the industry is likely to play in supporting legacy planning over the coming decades."

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