The uptick in inheritance tax receipts for the six months to October 31 shows individuals are not seeking appropriate advice, according to Andrew Aldridge, partner at Deepbridge Capital.
Inheritance tax receipts for April to October this year were £3.6bn, a rise of £600m compared with the same period in 2020.
Aldridge said: "It shows how easy it is for individuals and couples to generate a potentially large inheritance tax bill when they die, despite not being what they may perceive as ‘wealthy’.
"Despite a majority of financial advisers telling us that inheritance tax is a primary financial planning consideration, these latest figures clearly show that many individuals are still not seeking the advice, which can make it possible to pass on more of their wealth to their family."
HMRC said the higher receipts recorded between March and August this year were expected to be due to higher volumes of wealth transfers that took place during the Covid-19 pandemic, though it said it could not verify this until full administrative data becomes available.
Shaun Moore, tax and financial planning expert at Quilter, said the “soaring” housing market was likely contributing to the spike in receipts, but that there were ways to reduce tax exposure.
House prices have kept rising over the past year. The average UK house price was £264,000 in August, which is £25,000 higher than a year ago, according to the Office for National Statistic’s house price index.
Moore said: “This tax year, you can pass on £175,000 of your property tax-free, which is effectively doubled to £350,000 when combined with the allowance of your spouse or civil partner.
“That’s layered on top of your inheritance tax allowance – or nil rate band – of £325,000, meaning it is possible to pass on £1m inheritance free as a couple.
“However, this works for those with direct descendants to inherit the family home, while the UK’s six million cohabitees are less fortunate and cannot claim the combined allowances.”
He added there were other ways to reduce the IHT tax burden, including giving family members potentially exempt transfers (Pets), or chargeable lifetime transfers (CLTs), but these take seven years to see the benefit.
Andrew Gillett, head of wealth management advice at BRI Wealth Management, agreed planning ahead was most important.
“The important thing is that families don’t sleep walk into paying this tax and take advice in good time to ensure planning is effective.”