Inheritance tax (IHT) receipts show that £5.7bn was collected in the first three quarters of the 2023/24 financial year, an increase of 8% year-on-year, HM Revenue and Customs (HMRC) has found.

As a result of the increase, HMRC said that it looks likely that another annual IHT record will be reached.

Last year, IHT raised £7.1bn but many analysts believe that this will be beaten in the current financial year as a result of frozen tax thresholds and rising asset values.

Group communications director at Just Group, Stephen Lowe, said: "We are now three-quarters of the way through the 2023/24 financial year and it is evident that the Chancellor can once again bank on record-busting IHT receipts for a third successive year.

"Freezing the thresholds has dragged more households into paying IHT especially when combined with the property price rises of the last five years or so. At the current rate of collection, IHT will raise around £7.6bn for the Treasury in this financial year, far surpassing the OBR’s forecast of £7.2bn as well as last year’s all-time high of £7.1bn.

"Only a small proportion of households are impacted by IHT, but the tax bites deep on those estates affected. Our research suggests there is a low level of understanding around the IHT rules and thresholds, with the majority unaware of how much their estate must be worth to incur a tax charge."

There were rumours last year that the Government was planning on scrapping IHT.

However, this was overlooked in the autumn statement, with criticism from some corners of the industry highlighting that more people were being pulled into the IHT net.

Head of retirement analysis at Hargreaves Lansdown, Helen Morrissey, said that the spring Budget is looking likely to bring IHT to the forefront.

She said: "Reported government plans to axe IHT at the last autumn statement were widely criticised, but with a mixture of frozen thresholds and historic house price growth pulling more people into the net, we may well see plans to reform this tax made a feature of March’s Budget. Increasing thresholds and gifting allowances that haven’t been touched for years could help some families from falling into the net and would likely prove more popular than a decision to scrap it completely. For the sake of simplification, it also makes sense to do away with the separate nil rate band for property and roll it all into one.

"Whether the Chancellor has IHT in his sights at the Budget or not, it is important for those who think they may have a liability in the future to take full advantage of the current gifting structures in place to mitigate it where possible. Making gifts to family members – for instance using the £3,000 annual exemption, or gifts made out of surplus income - can do much to reduce your potential liability while also helping your family members build their financial resilience. However, you must take care to document your gifting carefully so there is a full record of what you have done."

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