Nothing is certain in life except death and taxes. It has been quite a week for news that affects people’s pockets, with better-than-expected inflation data released on Wednesday taking the markets by surprise.

This resulted in a decision on Thursday by the Bank of England’s rate-setters to keep interest rates on hold at 5.25%, finally bringing a pause to the mounting pain caused by 14-successive rises.

While the squeeze from rising prices, higher borrowing costs and increased taxation has certainly not gone away, this week’s news brings hope that there is some light at the end of the tunnel and the worst of the cost-of-living crisis may now be behind us.

Amid a broadly more encouraging set of news, one set of data that was quietly released, and is likely to be viewed less positively by some, was the latest Inheritance Tax receipts. It was revealed that in the period April to August, tax raised from the estates of the deceased rose to £3.2 billion, a significant jump of £0.3 billion compared to the same period last year which went on to see annual IHT receipts in 2022/23 hit a record high, both in absolute terms and as a proportion of UK Gross Domestic Product. The Office of Budget Responsibility has forecast that by 2027/8, IHT will raise £8.4 billion, a 17% increase on their projection for the current year. This may prove too conservative a forecast.

While IHT represents a tiny part of overall taxation in the UK, and affects a relatively small proportion of the population, surveys regularly indicate it is a deeply unpopular tax with much of the population, many of whom regard it as little more than a form of graveyard robbery.

Death duties in one shape or form have been a feature of the tax system for centuries and so are nothing new. However, having historically been aimed at the very wealthy, IHT is starting to impact increasing numbers of families who would not regard themselves as lavishly rich. Left unchecked, it will continue to draw in a much wider set of people over the coming years because of frozen allowances, property prices that have risen over the long term and powerful demographic trends.

One of the major reasons that IHT is one of the fastest growing sources of taxation is that the nil-rate band – the value of an individual’s estate which is free from the tax on death – has been frozen at £325k per person since April 2009. That 14-year freeze, which the Chancellor announced he would leave in place until 2028 in last year’s autumn statement, has seen the allowance plunge dramatically in real terms. Were the allowance to have been adjusted for inflation, in today’s money it would now be just shy of £500k per person.

But another reason IHT receipts are set to continue to soar higher as more people become caught in the trap, is the age profile of the population. In the aftermath of the Second World War, births spiked dramatically as the troops came home, peaking at 1.025 million in 1947. Those born at the height of the post-war “baby boom” are now in their mid-to-late seventies and in aggregate, this generation holds much of the UK’s personal wealth. With average life expectancy in the UK around 79 for males and 83 for females, the next several years will likely see a spike in inheritances as the baby boomers pass away, and alongside that a potential tax bonanza for the Treasury’s coffers. It’s important to remind ourselves that those paying the cost of IHT are not those who have passed away, but their loved ones and descendants, including younger people who might be struggling with debt or unable to get on the property ladder. No wonder then that with a General Election looming, there is increasing talk in some quarters about either a complete overhaul of the system, a steep rise in the nil-rate band or even scrapping IHT altogether.

However, it is unwise for those potentially affected to cross their fingers and simply hope politicians will act. With careful planning, a potentially hefty IHT bill can be mitigated or even eliminated entirely. This includes making gifts to your loved ones while you are alive, providing you are comfortable you will not need the money yourself. There are various gifting allowances, but any gift is potentially exempt from an estate for IHT purposes if you then live another seven years. Contributing to a money-purchase pension can also be a tax efficient way of passing on wealth, as these are not subject to IHT. There are certain types of assets that potentially qualify for Business Relief which excludes them from an estate for IHT purposes, such as Enterprise Investment Schemes and most AIM-listed companies.

There are numerous routes to mitigate IHT, which should be considered carefully and ideally when you are still in good health with hopefully years of life ahead. But many people do not like to consider such things until it may be too late to act or think that the apportionment of their wealth on death is a matter solely for their Will. As the old saying goes, “nothing in our lives is certain except death and taxes”. It is therefore wise to consider how exposed your loved ones could be to taxation on your assets when you die and ways in which this might be addressed.

Jason Hollands is a managing director at wealth manager Evelyn Partners, which has offices in Glasgow, Edinburgh and Aberdeen.