Inheritance tax is owed on the part of someone’s estate above the tax-free threshold of £325,000, which can rise to £500,000 if a home is given to a child or grandchild.

The current rate one is taxed is 40 percent.

There are reports suggested that downsing street could be scrapping the tax in next years Spring Budget.

The move would cost the Treasury around £8billion a year.

Jon Sullivan, inheritance tax expert at Wesleyan explained that with the inheritance tax reciepts on the rise, families must make sure they’re seeking proper advice to avoid a situation where their loved ones are “paying it unnecessarily”.

Nil rate bands and gifting thresholds have remained untouched for years. At the same time, there’s been a rapid growth in house prices which has meant that many people who may not have expected to be liable for IHT now are.

Britons are urged to consider all options to cut their bills to avoid paying thousands.

Mr Sullivan said: “The scale of IHT exemptions has grown considerably since 2005. Even so, IHT receipts continue to rise – up £400m year-on-year by the latest figures – and more and more estates are finding themselves with tax bills to pay.

“This doesn’t always have to be the case. IHT is a tax that can be managed.

“Families must make sure they’re seeking proper advice to avoid a situation where their loved ones are paying it unnecessarily.

“We would like to see some of the complexity removed from the system, particularly around trusts and the application of the relevant property regime.

“If an increase to the nil rate band could be funded, it wouldn’t just benefit deceased estates, it would also increase the amount that could be placed into trust tax free, and help smaller trusts remain outside of periodic charging.”

This year, we’re expected to pay £7.6 billion in IHT, but with the same thresholds and rate in place, by the end of the 2028/29 tax year, it’s forecast to be £9.8 billion.

The latest figures from HM Revenue and Customs (HMRC) show that inheritance tax receipts increased to £5.2 billion in the eight months from April 2023 to November 2023.

This is a £400 million increase from the same period in the previous year and continues the upward trend over the last decade.

However as a way to decrease the bill, Britons can use gifting. There’s no limit on what people can gift, tax-free, to their spouse or civil partner, and everyone has an annual exemption of £3,000 that they can give away each year, free of IHT.  

People can also give up to £250 away to as many people as they’d like each year, without it counting towards their £3,000 allowance, and make unlimited tax-free gifts if the money is being given regularly from their salary or their pension income – provided it doesn’t affect their own living standards.

There are also special exemptions if someone is giving money to someone for their wedding.

Mr Hyett explained that those concerned about inheritance tax can also consider:

• Investing in companies that qualify for Business Relief. These are typically inheritance tax-free after two years. Investing in unquoted businesses can be risky, however, unlike giving the money away, investors retain control.

• Investing in an AIM ISA. ISAs are not inheritance tax-free. When people pass away, their loved ones could miss out on 40 percent of their hard-earned cash. AIM ISAs are a popular way around this. They are riskier but after two years they could be IHT free.