What is Inheritance Tax and some tips that may help you reduce your liability.

UK IHT stands for "United Kingdom Inheritance Tax." Inheritance Tax is a tax levied on the estate (property, money, and possessions) of a person who has passed away. In the UK, inheritance tax is payable on estates worth more than a certain amount (the "threshold"), which is currently ￡325,000. If the total value of an estate is above this amount, then the beneficiaries of the estate may be required to pay inheritance tax at a rate of 40% on the amount above the threshold. The UK government uses the revenue generated from inheritance tax to fund various public services.

HM Treasury will take ￡7billion in inheritance tax this year and the total will steadily climb as Chancellor Jeremy Hunt has frozen the threshold for paying the hated "death tax" until 2028.

Ordinary families often pay this punitive 40 percent levy while the super wealthy plan ahead to avoid a bill altogether.

Inheritance Tax (IHT) is a tax imposed by the UK government on the transfer of a person's estate (property, money, and possessions) after they pass away. Here are some tips that may help reduce your IHT liability:

1. Make gifts: You can reduce your estate for IHT purposes by making gifts to individuals during your lifetime. There are annual and lifetime gift allowances that you can use without incurring an IHT liability.
2. Use your exempt gifts: There are some gifts that are exempt from IHT, such as gifts to your spouse or civil partner and gifts to charities.
3. Make a Will: Having a legally valid will in place can help ensure that your estate is distributed according to your wishes and can also help reduce the IHT payable.
4. Consider trusts: Setting up a trust can help to reduce the IHT payable on your estate as the assets within the trust are outside of your estate for IHT purposes.
5. Life insurance: Consider taking out a life insurance policy specifically to cover any potential IHT liability. The proceeds of the policy would be paid to your estate, which would help to pay any IHT that may be due.
6. Business relief: If you own a business, you may be eligible for Business Relief, which can significantly reduce the amount of IHT payable on your estate.