The amount paid in inheritance tax (IHT) has continued to climb, reaching £5.2bn in 2017/18, despite the recent introduction of a nil-rate band for family homes.
Latest figures from HM Revenue & Customs out today (31 July) showed the amount paid in IHT increased 8 per cent on the previous year, the eighth year in a row when receipts have gone up.
The average taxpaying male-owned estate has a tax liability of £182,000, with females estates having to pay on average £176,000.
Since April 2017 there has been a £100,000 nil-rate band when a residence is passed on death to a direct descendant but this does not appear to have stopped IHT receipts from increasing.
Since 2009/10 the net capital value of estates has increased by £17bn, to £79bn in 2015/16, with about 54 per cent of this increase coming from residential property.
Meanwhile, the proportion of deaths liable to IHT has gone up from 2.6 per cent in 2009/10 to 4.2 per cent in 2015/16.
Sir Steve Webb, director of policy at Royal London, said: "The amount of money raised from inheritance tax has doubled in less than a decade, and a steadily rising proportion of estates are now caught within the inheritance tax net.
"Even the introduction of an additional nil rate band for families passing on a home to their children was not able to stem the growth in IHT revenues. Yet the tax remains complex and riddled with anomalies.
"It remains that the case that IHT is a complex tax largely paid by those who do not have access to financial advice, and the sooner it is overhauled the better."
Earlier this year the Chancellor of the Exchequer wrote to the Office of Tax Simplification asking for a review of IHT, after saying the levy and the regime in which it operates was "particularly complex".
Philip Hammond asked the OTS to look at whether the system is fit for purpose, and whether there are any opportunities for simplification.
The residential nil-rate band will gradually increase to £175,000 by 2020/21 and from then on it will increase in line with CPI inflation.
Together with the inheritance tax nil-rate band and the ability to transfer unused main residence nil-rate band to a surviving spouse or civil partner, this allowed the government to claim there will be an effective inheritance tax threshold of £1m in 2020/21.
Rachael Griffin, tax and financial planning expert at Quilter, said: "There are simple changes that can be made so that people don’t need technical training to navigate the system. One such change is remove the overly-complicated residence nil-rate band and instead increase the nil-rate band to £1m.
"The nil-rate band has been frozen at £325,000 since 2009. If it had tracked inflation it would stand at £414,000 in 2017, an increase of 27 per cent."
According to HMRC's figures, where net estate value was less than £2m, estates were likely to consist mainly of residential property and cash.
Above this limit, estates were more likely to consist of securities and other assets which attract reliefs like agricultural property relief (APR) and business property relief (BPR). This had a tendency to lower the average tax rates.