The number of estates subjected to inheritance tax (IHT) has risen by 13% in the space of a year, new figures from HMRC have shown.

According to HMRC data released today, an estimated 27,800 estates were paying IHT in the 2021/22 tax year, a figure that increased to 31,500 in 2022/23.

The figures also revealed that 4.62% of UK deaths resulted in an IHT charge in 2022/23, creeping up from 4.49% of all deaths in 2021/22.

IHT liabilities created in 2022/23 totalled £6.7bn, a rise of £710m on the previous year, which HMRC put down to a combination of higher volumes of wealth transfers following recent IHT-liable deaths, recent rises in asset values, and the Government’s decisions to extend the freeze on IHT thresholds at their 2020 to 2021 levels up to and including 2029 to 2030.

“Frozen IHT thresholds and rising house prices are dragging more and more grieving families into paying the hated death duty,” said the chief executive of the TaxPayers’ Alliance, John O’Connell.

“Yet in the ultimate sign that the Government views wealth and affluence with contempt and envy, the only changes they have made have been to hammer family businesses and farms.

“Whoever makes up the next Government should scrap IHT in its entirety.”

HMRC’s data also revealed that the combined value of agricultural and business property relief set against assets was £5.3bn in 2022/23, a rise of £860m (19%) on the previous year.

However, the value of exempted transfers to qualifying charities fell to £1.9bn, from £2.1bn in 2021/22.

Head of estate planning at Evelyn Partners, Ian Dyall, noted that the latest liability figures had provided some “granular detail” on how IHT is distributed and what reliefs are being used.

Dyall suggested that while more households are being drawn into the IHT net, the bulk of liabilities tend to still be concentrated among a small number of large estates. An estimated 6,400 families with net wealth greater than £1.5m paid £4.3bn in IHT – or 64% of the total.

“Families with that level of wealth tend not to garner much sympathy but the Treasury cannot sustainably prop up the public finances by taxing the wealthiest one or two per cent forever without consequence,” he added.

“The danger with seeking further taxation of wealth at the next Budget – whether that is via capital gains tax, IHT or some other mechanism – is that such households, which are often wealth and business creators in themselves and quite mobile, could get fed up and leave the country.

“As they are responsible for a good chunk of overall tax revenues in the UK, that would be counterproductive.”

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