New HMRC figures have revealed UK citizens paid £5.4 billion in Inheritance Tax in 2018/19, a 3% increase on the previous tax year.

The statistics also revealed that in the past nine years the amount HMRC has raised through IHT charges has more than doubled

IHT bills have been rising steadily since 2009/10, mainly as a result of the Government freezing the nil-rate band at £325,000

The Office for Tax Simplification recently proposed a series of radical IHT simplifications

Tom Selby, senior analyst at AJ Bell, said: “With the nil-rate band frozen at £325,000 for a decade, it is no surprise that HMRC continues to rake in record sums through IHT.

“The world of inheritance tax is painfully difficult to navigate and while the wealthiest should be able to afford suitable advice to take advantage of the various exemptions and reliefs available, those who can’t risk being caught out.

“As a minimum, the level of the nil-rate band should be looked at again and increased in line with inflation.

“Ideally a more fundamental Government overhaul of the IHT framework should also be undertaken, aimed at simplifying the structures for investors.”

He added: “Savers can mitigate HMRC’s IHT tax grab by saving in a pension.

“Under changes introduced in 2015 alongside the pension freedoms, untouched defined contribution pensions can be passed on tax-free to beneficiaries if you die before age 75, while if you die after 75 the money will be taxed in the same way as income when it is withdrawn.

“One area the Government should act on is a quirk in the rules which means most providers are required to exercise discretion over how pension death benefits are paid out in order to prevent an IHT charge being levied.

“This seems odd in a world where retirement control has been firmly put in the hands of the individual.

“The current approach can cause delay and administrative headaches at a painful time for beneficiaries and it would be much simpler if pensions were removed from IHT altogether.”