One proposal under consideration is to replace inheritance tax (IHT) with a 10% care levy on the value of assets, a move the firm believes is designed to increase government revenue.
David Alexander, chief executive of DJ Alexander Ltd, said: “It is commonly thought that IHT is something that only impacts upon the very wealthiest in society.
“It is the toffs, the rich who will pay and not the ordinary person down the road.
“The truth is that with a rapidly rising housing market over the last few decades many more people are being drawn into this iniquitous tax, and their relatives may get a shock when the estate is being settled.”
Inheritance tax revenues reached a record £7.03 billion in the 2023/24 tax year, an increase of £330 million on the previous year.
The Office for Budget Responsibility (OBR) forecasts that IHT revenue will rise to £9.1 billion by 2025/26 and could more than double to £14.5 billion by 2030/31, affecting as many as 10% of estates.
This rising tax take is partly due to the freezing of the £325,000 nil-rate band since 2009, which will remain in place until 2031.
If the threshold had risen in line with inflation, it would now stand at £538,414.
Mr Alexander said: “In Edinburgh and East Renfrewshire, for example, average house prices are now over £300,000 and there is little doubt that in the next few years average prices will be above the IHT threshold.
“In the Edinburgh Solicitors Property Centre website of the 1,308 homes listed for sale in Edinburgh this week 40.1% (532) are above the IHT threshold.”
Additional factors are expected to draw more estates into IHT liability.
From April 2027, pensions will be included in assessments, which could bring 50,000 more estates into the tax net.
Changes to agricultural and business property reliefs, introduced last April, are also expected to increase tax receipts.
Public sentiment appears to be against the current system.
Recent surveys found that 54% of respondents support the complete abolition of inheritance tax, while 67% would like to see the threshold raised.
Mr Alexander said: “This tax increasingly impacts on ordinary homeowners who have simply seen the value of their property and assets increase over the last three decades.
“To state that someone who has paid a mortgage and saved all their life and accumulated assets worth over £325,000 is now rich is clearly not a realistic definition of wealthy.”
Mr Alexander said: “This is a tax on pensioners who have seen the value of their modest homes increase in value; it is a tax on families who have sought to do the right things by working hard, saving, and accumulating assets in the hope of leaving something to their children; and it is a tax on the entrepreneurs and business owners who create wealth in society and are now to be punished for this at the end of their working lives.
“The greatest irony in all of this is that these increases in IHT won’t hit the very wealthy who have advisers and accountants to ensure their liability is reduced.
“It will be those in the middle who cannot afford such advice and are hit with an increasingly punitive targeting of their homes, pensions, savings, and general assets which are all seen as fair game.”
