Inheritance tax has traditionally been regarded by many as something only the super-wealthy need to think about.

But this has changed dramatically over the past decade and I'm on a mission to ensure that as many of Future Life Wealth Management's clients as possible are aware of the potential repercussions.

In short, the amount the government has collected in inheritance tax has doubled in the last decade, as more and more people become liable to pay the charge.

According to Treasury documents seen by the Mail on Sunday, total receipts from inheritance tax now stand at £5.4bn – up from £2.7bn in 2010.

This increase is set to continue, with forecasts suggesting annual inheritance tax receipts could reach £7.6bn in the next five years.

These latest figures are likely to further the argument that the inheritance tax threshold isn’t keeping pace with wider changes in the economic environment and people’s personal finances.

The inheritance tax threshold currently stands at £325,000, and this tax doesn’t have to be paid if:

• You leave everything above the £325,000 to a spouse, civil partner or good cause

• The value of your estate doesn’t exceed the threshold

The standard inheritance tax rate is 40%, and this is charged on anything in your estate that’s above the threshold.

However, house prices have risen dramatically in recent years, which is taking the total value of many people’s assets well above £325,000.

In fact, the latest figures from Nationwide show that the average price of a home in the UK now stands at £260,230, following a record increase of £29,162 over the last year.

This was the biggest cash increase in property prices that Nationwide has observed since it began collecting comparable data more than 30 years ago.

The data also suggests that annual house price inflation is accelerating, rising from 11.2 per cent in the year to January to 12.6 per cent in the year to the end of February.

So, is the inheritance tax threshold now too low, and should it be keeping pace with house price growth?

The government plans to keep it at its current level until April 2026, and the Chancellor of the Exchequer Rishi Sunak was notably silent on inheritance tax in his recent Spring Statement.

The increase in house prices reflects how demand for property is far exceeding supply, and how the type of housing that many people are choosing to purchase has changed as a result of the pandemic.

It’s therefore possible that a push to build more homes could help to solve the issue of more people being pushed into paying inheritance tax…

But this will invariably be a long-term solution, with the effects not being felt for several years at least.

In the meantime, I fervently believe that it's more imperative than ever to get financial advice at the earliest opportunity about managing your finances…

And particularly about taking steps to avoid or reduce your inheritance tax liability.

To get in touch with Jill click HERE.