Personal tax expert, Christine Cairns, estimates that if the IHT band threshold had followed inflation trends each year since 2009, it would have reached over £478,000.
This is more than £153,000, which could have been passed onto families tax free and means that a grieving family paying IHT at 40 percent, will pay an additional £61,231 to HMRC because of the freeze.
So, how can you avoid paying IHT as the net creeps ever wider?
- Reducing your estate through gifts
An outright gift is one of the simplest ways to reduce an estate, for example, giving an adult child or grandchild a deposit for a house.
Such gifts are potentially exempt transfers (known as PETs) and so may be chargeable to IHT if you die within seven years of the gift. This is known as the “seven-year clock”.