Do I need to worry about this?

Inheritance tax (IHT) can be a highly complex area of financial planning but, for many clients, it is usually possible to mitigate the effects of the tax with quite straightforward arrangements. There are many misconceptions around IHT with many people thinking that it is a tax which applies only to the very wealthy.

In fact, largely due to rapid increases in house prices seen over the last 30 years, and the fact that the IHT nil rate band threshold has been frozen since 2009, IHT is a tax which can affect clients with only modest investments purely because of the value of their home.

The inheritance tax (IHT) nil rate band has been frozen at £325,000 since April 2009 and will remain at this level until April 2026. The main residence nil-rate band was introduced in April 2017 starting at £100,000 and increasing annually by £25,000 until it reached £175,000 in April 2020. This band has also been frozen until April 2026.