Daily Junction.mobi portalInheritance tax (IHT) charges 40% on estates over £325,000 (nil-rate band), or £500,000 if you leave your home to children (residence nil-rate band). Married couples can combine allowances for £1 million tax-free (£325k + £175k residence × 2), but only 4% of estates pay IHT (most are below threshold). IHT raised £7.5 billion in 2023-24 (1.3% of total tax revenue), paid by 27,000 estates, with average bill £275,000. You can avoid IHT by: gifting money 7+ years before death, using annual gift exemptions (£3,000/year), leaving to spouse (tax-free), or giving to charity (tax-free). Business assets and farmland get 100% relief (tax-free), making IHT avoidable for the wealthy but unavoidable for middle-class homeowners with £500k-£1m estates. Inheritance tax is controversial — it taxes wealth, reduces inequality, and raises revenue, but it is easily avoided by the wealthy (business relief, trusts, offshore assets) and falls on the middle class. Most people do not pay IHT (96% of estates are below the threshold), but those who do pay a lot (average £275,000). If you are likely to pay IHT, plan ahead — give money away, use exemptions, put life insurance in trust, and take professional advice. The 7-year rule is the most powerful tool — give away your wealth and survive 7 years, and it is tax-free.