HM Revenue and Customs (HMRC) has collected more than £6 billion in inheritance tax (IHT) in the past 12 months.

This is the first time IHT bills have gone over the £6bn mark, research by accountancy group UHY Hacker Young found. The sum increased from £5.04bn to £6.01bn (up 19%) in the last year.

The firm said that the impact of COVID-19 and record-high property prices meant that a larger than usual number of estates became liable for IHT. Additionally, the government’s freezing of the tax-free allowance until at least 2026, contributed to widening the pool of estates owing IHT.

Nick Bird, head of strategic growth at Octopus Investments, said: “The freeze to IHT thresholds, coupled with rising property prices, means more estates than ever are likely to face an inheritance tax bill.

The good news is there is plenty clients can do to make sure this is not the legacy they leave behind. Now that we’re all living longer, that balance between lifetime gifting and keeping enough to feel secure in our later years has become more difficult, and that’s why lots of advisers are also considering flexible planning solutions, such as BPR, as a more flexible tool to pass money through the generations.”

Mark Giddens, partner at UHY Hacker Young, said: “Inheritance tax is becoming ever-more lucrative for HMRC, as the latest figures show.

“A tax that was original supposed to affect only the super-rich is increasingly hitting middle England. As a result, families increasingly understand the importance of tax planning to ensure they can pass the fruits of their labour to their children.

“The pandemic has led to record peacetime borrowing, and the Treasury will be looking to balance the books any way it can.”

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