Inheritance Tax (IHT) is one of the government’s most reliable forms of income. IHT receipts received by HMRC during the tax year 2020-2021 came to £5.4 billion and have remained around that level for the past four years, according to official statistics.1
Yet so much of the tax paid on the value of your estate after you die is avoidable. With careful planning to ensure full use of exemptions, gifting and other tax-efficient investments, it is possible to mitigate and minimise much of the IHT you would otherwise pay.
Failure to put those plans in place can significantly reduce what you are able to pass on to loved ones. Assets such as your family home, bank accounts, ISAs, jewellery, art and antiques are subject to IHT at the standard rate of 40% after the first £325,000.
Here are the five most important things you need to know about IHT – but were too afraid to ask.
1 Inheritance Tax statistics: commentary, HMRC National Statistics, updated 29 July 2021