The number of UK homes that will be subject to inheritance tax has tripled in the past five years, the Halifax bank has said.
Half London's properties could trigger inheritance tax
It said house price rises meant the tax would be payable on 2.1 million homes.
The bank reckons 12% of all privately owned homes are worth more than the tax threshold, rising to 50% of homes in London and south-east England.
Currently, people have to pay tax at a 40% rate on inherited assets worth more than £275,000.
That threshold is scheduled to rise to £300,000 in the tax year 2007/08.
But Martin Ellis, the chief economist at the Halifax, said it should be pushed up much further:
"This trend will worsen unless the government acts now and raises the threshold to fully reflect the increase in property prices."
The bank estimates that if that lower limit had kept pace with property inflation over the past 10 years it would now stand at £406,600.
A Treasury spokesperson said: "No previous administration has ever linked tax thresholds, including inheritance tax thresholds, to price movements of any particular asset. The practice of this government is no different."
Inheritance tax is estimated to bring the government an income of £3.4bn this year.
That is a rise of nearly £1bn pounds in just two years.
INHERITANCE TAX FACTS
The inheritance tax threshold is £275,000 for 2005/06
The value of estates above the threshold is taxed at 40%
The number of taxpaying estates in 2005/06 will be about 37,000, or around six in 100 deaths
The threshold will be £285,000 for 2006/07 and £300,000 for 2007/08
Avoiding the tax has created a small industry for financial advisers and accountants.
Measures in this year's budget attacked some of the schemes through which people were trying to avoid the tax, for instance by passing homes to their children while still living in the properties.
But there are still steps that can be taken.
John Whiting, a senior tax partner at the accountancy firm PriceWaterhouseCoopers, said: "Unmarried couples should get married - that's an excellent tax avoidance measure, if a bit drastic."
"They should also consider owning their property as tenants-in-common, rather than jointly, and they could also think about leaving their property in some form of trust."
Making a will is also a good idea.
It doesn't in itself lessen a potential tax burden, but it does force people to start thinking about what their children or other relatives might inherit.
Even if everyone takes these steps though, Mr Whiting says many more people will end up paying inheritance tax one way or another.