New Halifax research, based on data from the Inland Revenue, shows that inheritance tax revenue hit a record £1.7bn in first half of 2006, up £200m or 13% from the first half of 2005.

The amount of inheritance tax (IHT) revenue collected in the first half of 2006 matches total IHT revenue collected over the full financial year 1997/98.

Halifax estimates that the number of properties in the UK valued at more than the 2006/07 inheritance tax (IHT) threshold of £285,000 now stands at 1.5 million, or 8% of all owner-occupied properties.

Halifax projects this will nearly triple to 4.2 million properties by 2020 if the threshold is only increased in line with retail price inflation.

Halifax also predicts that the revenue collected by the Exchequer from IHT could rise to £5.5 billion a year in today’s money by 2020. That’s a 244% increase from the £1.6bn the Exchequer received in 1996/97, which was the last time the IHT threshold was raised significantly.

Inheritance Tax is still an issue for many and successive governments have failed to take in the growth in house prices with the growth of inheritance tax. Halifax said that the 2006/07 IHT threshold of £285,000 would now be £430,000 if it had been increased in line with house price inflation over the past ten years.

House prices have risen by 179% in the past ten years, compared with just an 85% increase in the IHT threshold. At present the inheritance tax threshold is projected to rise very gradually to £325,000 by 2009/10.

Tim Crawford, Group Economist at Halifax, said: “Inheritance tax revenues are clearly on the rise and the £1.7bn collected in the first half of this year matches the total inheritance tax take from the whole of the financial year in 1997/98.

Inheritance tax revenues have risen because the threshold for the tax has failed to keep pace with the rise in property prices over the past ten years. More and more homes are now valued above the threshold and more estates are now potentially liable for the tax. We call on the government to raise the inheritance tax threshold to £430,000 to account for the increase in property prices over the past ten years.”