Inheritance tax (IHT) receipts are on course to be around 40% higher than three years ago following the first seven months of official data for the current tax year.

October’s receipts of £776m were two thirds higher than the same month in 2021.

As a result, annual receipts are set to smash through the £8bn level this tax year to about £8.5bn, according to wealth manager Charles Stanley.

This follows previous record setting years in the 2021/22, 2022/23 and 2023/24 years of £6.1bn, £7.1bn and £7.5bn respectively.

Rob Morgan, chief investment analyst at Charles Stanley, said receipts are on the rise due to the continuation of ‘fiscal drag’, the freezing of the IHT nil rate bands at the same time as asset prices rise in value.

The bands have been static since the 2020/21 tax year but in the meantime prices and property values have soared.

He said: “Going forward, the effect of fiscal drag is set to continue with the bands frozen for even longer until 2030. Yet measures announced in the Budget mean the death tax take is set to balloon in an unprecedented fashion in future years, swelling the government coffers significantly.

“Draft rules bring inherited pension pots into the net for the first time from 2027 and apply a cap to agricultural and business reliefs relief from 2026. This could double the number of estates paying the tax and dramatically increase the burden for those already set to pay it.”

He added that the changes make pensions a much less attractive tool for estate planning for many.

He said that  accelerated withdrawal from pension pots to fund gifts could be more beneficial from an IHT planning perspective, but overall tax efficiency from an income tax perspective will also be a factor.

Mr Morgan said he expects the changes to lead to many looking to change their estate planning: “Overall, it highlights the need for financial plans to be adaptable to the prevailing conditions. For some, the changes to the IHT regime will mean the need to rethink existing strategies before they take effect. For others, it’s a case of having to make specific IHT plans for the first time.”