While frozen inheritance tax (IHT) thresholds proceed to put a heavy burden on households, many have been looking for methods to plan higher, scale back the invoice and provides extra to family members.

People could also be unaware that their pension generally is a tax-efficient option to move on wealth, however there are guidelines.

Paul Barham, companion at Mazars commented: “Individuals can take steps to mitigate their IHT liability, all it takes is some planning. Personal gift allowances, using clear expression of wish documents and even having a valid Will in place are often overlooked IHT planning tools.”

Mr Barham continued: “Pensions can be a valuable tool when passing down wealth because they sit outside your estate for IHT purposes.”

He defined that as of April 2023, the lifetime allowance (the overall quantity an individual might construct up in pension financial savings with out incurring a tax cost) was eliminated, which means “there is no limit on how much you can save over your lifetime”.

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He added: “If you have assets inside and out of a pension plan, you’ll want to consider when to draw down from your pension and whether to also consider using non-pension assets to meet the full cost of everyday life.”

However, Emma Watson, head of economic planning at Rathbones Group Plc warned that whereas property in pensions are often exempt from IHT: “To make sure they are not paid into your estate and taxed, you should check with your pension provider that you have a nominated beneficiary in place.”

People may also contribute to a member of the family’s pension, which may include its personal tax advantages.

Liz Hunter, director at Money Expert instructed Express.co.uk : “You can also contribute to a family member’s pension. The recipient would maintain their pension allowance of 100 percent of their earnings, or £3,600 if they have no earnings.

“This means that as long as their pension contribution remains below this allowance, you can donate as much as you like. The pension holder can then claim a 20 percent tax rebate and could possibly claim the rest through a self-assessment tax return.”

What is the present inheritance tax charge?

Inheritance tax is charged on an individual’s property if the overall worth of property exceeds £325,000. This is the present tax-free threshold, known as the nil-rate band, for the 2023-24 monetary yr.

The quantity above this threshold may very well be topic to an inheritance tax charge of 40 %, except left to a partner, civil companion or a charity, by which case the principles change once more.

Ms Watson added: “Everything below this amount is not liable to IHT, however certain gifts, if not covered by the available allowances, may reduce the amount of nil rate band available on your death.

“In addition, if you leave your family home to your children or grandchildren, an extra nil rate band of up to £175,000 may also be available meaning more of your estate can be passed on tax-free (although this is reduced for estate values over £2million).”

People can read more about inheritance tax rules here.