A record-breaking £5.1 billion has been collected by HMRC through Inheritance Tax (IHT) receipts in the last year, Wilsons, a private client law firm, has found.

The figures from HMRC show that IHT take has risen by nine percent on the previous year when £4.7 billion was collected over the same period.

According to Wilsons, the growing value of residential property coupled with the freeze on the IHT threshold at £325,000 means more and more estates are being hit by the tax. The firm also considered that, at 40 percent, IHT is one of the UK’s more "punitive" taxes.

Wilsons advised that it is vital that individuals seek out advice to help them plan how their wealth is transferred to their children in a tax-efficient manner and that they start this process as early as possible. The firm said that failure to do this makes it more likely that they will leave their dependents with substantial IHT bills.

Steps that can be taken include: 

- Making gifts from "surplus income" – regular gifts made out of annual post-tax income can be IHT-free provided certain criteria are met 

- Making gifts or loans to help children or grandchildren buy properties

- Making the best use of pensions as tax-planning vehicles

- Taking advice to structure wills in a tax-efficient way

Tim Fullerlove, partner at Wilsons, commented: “A substantial amount of wealth is now being taken by the government through IHT. What upsets people is that this is wealth that is being taxed twice.

“It is important that people start planning as early as possible how they mean to pass their wealth on to their children or grandchildren. If they do not do this, families could be met with large IHT bills.”

He added: “There are a number of steps than can help transfer wealth gradually, tax-free – ultimately reducing IHT considerably.”