Inheritance tax (IHT) netted £3.2bn for the Treasury between April and August this year, up £0.3bn on the previous period last year, according to latest figures from the UK government.
The total IHT tax take for the 2022/23 tax year was £7.1bn. Industry experts pointed out this meant that the total take was "well on course to break new records and could come close to £8bn".
Quilter tax and financial planning expert Rachael Griffin said: "This increasing revenue causes a policy conundrum for the government as election season draws nearer and more Tory backbenchers call for IHT reform or its abolition as a vote-winning tactic. Increasing the IHT threshold to £1m is one of the latest to be tabled, and while it would likely be a crowd pleaser, the government might be less keen given the ever-increasing revenue it is seeing from the tax."
She explained that the chancellor extended the IHT threshold freeze until at least April 2028.
"It is looking likely to rake in record amounts by stealth," said Griffin. "Higher property prices have upped the number of households falling in the scope of IHT, and while growth has slowed in the housing market, we are still yet to see a significant drop in prices."
The value of the average UK home now sits at almost £290,000, just £35,000 less than the frozen £325,000 IHT nil rate band.
"Frozen IHT thresholds form part of a broader fiscal drag strategy employed by this government, which has also frozen income tax thresholds, capital gains tax allowances and dividend allowances in order to boost revenues," she added.
Canada Life tax and estate planning specialist Julia Peake agreed the tax haul posed a political sticking point: "The Tory government have recently talked about a ‘manifesto pledge' to abolish IHT altogether if this is the case, it will leave a large £7bn gaping hole in taxes to fill.
"The question is, what would they be likely to replace this with should they remain in power post the expected general election which is due anytime next year. Regardless of abolition or reformation (or nothing at all), all signs point to a record-breaking year in IHT receipts for HM Treasury."
Peake said the Treasury had collected £133m per week in IHT this tax year so far, up by 10% compared to the same period last year.
She explained: "Despite the slowdown in the housing market over recent months, many people will be caught by the IHT trap.
"Both the standard and residence nil rate bands are frozen until April of 2028. That's if you get it - not everyone will be able to claim residence nil rate band due to their personal circumstances. While both the standard and residence nil rate bands (or a percentage of them) could be transferred, it is only applicable for spouses and registered civil partners, not co-habitants.
"Don't be caught out by thinking that this won't affect you. It's not just the value of your home that you need to consider, it's your whole ‘net estate' after liabilities have been considered and reliefs have been applied, which adds up over a lifetime."
Just Group crunched the numbers and said IHT had raised a further £644m for the government in August, compared to £576m in August 2022 as the tax "continues to deliver bumper returns".
It said the Office of Budget Responsibility's latest forecasts suggested IHT would raise £7.2bn this financial year and as much as £8.4bn in 2027/28 yet rumours suggest the government is "looking at promising to scrap the tax ahead of the next general election".
Just Group group communications director Stephen Lowe said: "IHT receipts continue to swell the Treasury's coffers as it generates record sums year on year. Frozen thresholds and property price increases are catching thousands more estates in the Inheritance Tax net.
"This spring, HM Revenue & Customs significantly increased its prediction of the number of new estates expected to be dragged into paying IHT in 2021 to 2028. It now estimates that almost 50,000 new estates will incur the tax, a near four-fold increase compared to their previous estimate in November 2022.
"The increase in receipts should act as a warning for people to remember to assess the entire value of their estate, including an up-to-date valuation of their property.
"Professional, regulated advice can also help people work out the total value of their estate, calculate how much tax they may be likely to owe and understand what options they have to manage that tax bill."
