New HMRC figures show that the average inheritance tax bill in Scotland for deaths in 2018-19 was £195,798, an 8.5% increase on the previous year, according to insurance and investment firm NFU Mutual.

Although there were only 22,100 inheritance tax bills on UK deaths in 2018-19, NFU Mutual said this number is expected to grow after UK Chancellor Rishi Sunak froze allowances for five years.

“There were 1,190 deaths in Scotland in 2018-19 that resulted in an inheritance tax bill, and the average bill was £195,798,” said NFU Mutual.

“This was up from £180,469 the year before.

“Only 3.7% of UK deaths resulted in an inheritance tax bill in 2018-19, but that percentage is expected to rise following Rishi Sunak’s decision to freeze the tax-free allowances for the next five years to help pay the Coronavirus bill.

“And these latest figures show those families that do pay the 40% tax can end up forking out large sums of money.”

Sean McCann, chartered financial planner at NFU Mutual, said: “Inheritance tax is feared by many but paid by relatively few.

“But with the average bill in excess of £200,000, it can make a significant dent in a family’s wealth for those that do get caught in the net.

“With the tax-free allowances frozen for the next five years, rising asset prices and a heated housing market, a growing number of families will be impacted.

“It’s critical that families concerned about being caught by inheritance tax seek advice as early as possible.

“The earlier you plan the more options you have to mitigate any potential bill.”