Families are being urged to take advantage of the tax-free gifting allowance, which could save them up to £16,000 on inheritance tax. An inheritance tax hack could provide significant relief as families face what many consider an unfair charge from HMRC.
Rising Inheritance Tax Revenue
Labour Party and HMRC figures reveal that inheritance tax (IHT) brought in £8.4 billion between May 2025 and April 2026, marking a £100 million increase compared to the previous year's total of £8.3 billion. This rise has intensified calls for families to explore available tax-saving strategies.
Public Perception of Inheritance Tax
Saltus conducted a survey of 2,000 individuals with investable assets exceeding £250,000. Respondents ranked IHT as the second most unreasonably high tax, after the higher rate of Income Tax. Only 18 per cent of those surveyed consider the current £325,000 threshold to be reasonable. Half of respondents believe the nil-rate band should be lifted to more than £1 million, and nearly a third would prefer to see the tax abolished entirely.
Expert Advice
Alex Pugh, a chartered financial planner at Saltus, commented: Our report shows most high net worth individuals see the inheritance tax system as unfair, but theres a clear gap between that perception and action, with many not fully using the reliefs and exemptions available to them. She added: In practice, clients tend to know the basics like annual gifting and charitable exemptions, but there are a wider range of often underused allowances and planning strategies that many simply arent aware of.
Tax-Free Gifting Rules
HMRC rules allow parents to give up to £5,000 tax-free to a child entering marriage or civil partnership. Grandparents are allowed £2,500, and other individuals can give up to £1,000. These allowances can help reduce the value of an estate for inheritance tax purposes.
Mr Pugh further explained: Making gifts out of your regular surplus income is an excellent, highly effective way to reduce your inheritance tax liability. Unlike standard lifetime gifts that require you to survive seven years to be completely tax free, qualifying gifts from income are removed from your estate immediately.
