Revenue from inheritance tax (IHT) hit a record £1.7 billion in the first half of 2006, up £200 million compared with the same time last year.

Figures from the Inland Revenue, compiled by Halifax, reveal that the government collected some £3.3 billion in IHT last year and expects to collect £3.6 billion for the current financial year 2006 to 2007.

The rise in IHT revenue is so great that the same amount was collected in the first half of this year as the total IHT from the whole of the financial year 1997 to 1998.

"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," said Tim Crawford, group economist at Halifax.

"More and more homes are now valued above the threshold and more estates are now potentially liable for the tax."

A fifth of all properties, around 1.5 million, are predicted to be above IHT threshold by 2020, according to new figures.