Families paid a record £5.4bn in tax revenue in the 2018-19 financial year, with the average inheritance tax (IHT) bill reaching almost £200,000.
Analysis of HMRC receipts by NFU Mutual found 27,000 families were hit with IHT bills in 2018/19, with the total bill increasing £200m on the previous tax year and £600m on the financial year ended April 2017.
The average bill peaked in the 2017/18 tax year at £200,192 and fell slightly last year to £198,852 but five years ago, the average IHT bill stood at £141,000.
NFU Mutual’s analysis also found that 5,000 individuals paid IHT last year while they were still alive as a result of gifts to certain types of trust that can trigger a bill.
Sean McCann, chartered financial planner at NFU Mutual, said: "This is a deeply unpopular and fiendishly complicated tax.
"Successive governments have heaped on further layers of complexity that have made passing family wealth through generations more difficult.
"The Office of Tax Simplification’s review of IHT cannot conclude soon enough. Thousands of families could be missing out because of the unnecessarily complex IHT rules."
A review of IHT is currently underway as the Treasury is keen to simplify its rules. The IHT review was commissioned by Chancellor Phillip Hammond last year after he said in January he was concerned the system was "particularly complex".
In its first report on the inheritance tax system out last November the OTR pointed to a 'relatively high' tax gap compared with other taxes.
The tax gap represents the difference between the amount of tax HMRC expects to be paid, in theory, and what is actually paid as a result of non-compliance, simple errors, avoidance or criminal attacks on the tax system.
The OTR found the tax gap for inheritance tax was £600m a year despite a steady increase in receipts.
Lynne Rowland, tax partner at Kingston Smith, said at the time the IHT tax gap was a "principal driver" in the government’s eagerness to reform the tax system.
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