Originally intended to redistribute the wealth of the super-rich, inheritance tax can now affect many of us as a result of inflation and soaring property prices. The current threshold is £325,000, meaning the portion of your estate above this figure will be liable for 40% tax. There are a range of exemptions, though.
For example, if you leave everything above the threshold to your spouse or a charity, your estate will not be liable. Also, if you give your main residence to your direct descendants, your nil rate band can increase to £500,000. There are also many legitimate ways to mitigate the impact of inheritance tax on your estate such as placing money in trusts, maximising your free gift allowances, and taking out a life insurance policy.