The government collected £4.9bn in inheritance tax in the last year, the latest data released today by tax authorities revealed.
That represented only a four per cent year-on-year increase in 2016 to 2017 after a 22 per cent surge in receipts in the previous tax year, according to HM Revenue and Customs.
Inheritance tax receipts have risen to consecutive record levels since a steep fall following the financial crisis a decade ago. The total inheritance tax take is now double what it was only in 2003.
The receipts in the last tax year were higher than expected by the independent budget watchdog, the Office for Budget Responsibility (OBR), which had forecast a one per cent rise to £4.7bn. The OBR predicts the inheritance tax take will rise to £6.2bn by 2021-22.
The big rise in inheritance tax over the past decade has followed the steep rise in house prices, as well as other assets invested in stock markets.
While nobody pays inheritance tax on estates below the value of £325,000 (or if they leave everything to their spouse, civil partner, a charity, or an amateur sports club), the steep increase in house prices has in effect made a large chunk of properties, particularly in London and the South East, fall under the tax.
Read more: What will pensions be like in 20 years?
Above the £325,000 threshold estates are charged a 40 per cent tax, although the threshold can double for couples.
The UK’s housing stock is as large as £6.8 trillion, according to analysis by estate agents Savills, dwarfing even all of the companies listed on the London Stock Exchange’s main market, which are worth £2.46 trillion.
Danny Cox, chartered financial planner at Hargreaves Lansdown, said: “The exchequer’s coffers continue to benefit from the booming housing market and rising asset values and despite the new tax break for the family home, inheritance tax receipts are set to break records again this year.”