A little-known inheritance tax (IHT) hack could save Britons up to £16,000 from HM Revenue and Customs (HMRC), according to analysts.
Families are being urged to take advantage of the tax-free gifting allowance. HMRC figures reveal that IHT brought in £8.4billion between May 2025 and April 2026, marking a £100million increase compared to the previous year’s total of £8.3billion.
This data arrives alongside fresh research from wealth manager Saltus, whose latest Wealth Index paints a picture of widespread dissatisfaction with the levy.
The survey, which gathered responses from 2,000 individuals holding investable assets exceeding £250,000, found that high net worth respondents ranked IHT as the second most “unreasonably high” tax after the higher rate of Income Tax.
Britons are being reminded about a little-known inheritance tax hack
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For those aged 65 and over, the sentiment was even stronger, with retirees identifying inheritance tax as the single most unjust levy in Britain’s entire taxation system.
The research revealed that a mere 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 £1million, while nearly a third would prefer to see the tax abolished entirely.
The findings highlight a significant disconnect between how wealthy Britons perceive the inheritance tax system and their willingness to take advantage of existing planning opportunities.
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Alex Pugh, a chartered financial planner at Saltus, said: “Our report shows most high net worth individuals see the inheritance tax system as unfair, but there’s a clear gap between that perception and action, with many not fully using the reliefs and exemptions available to them.”
Ms Pugh pointed to several lesser-known exemptions that could help families transfer wealth more efficiently, particularly around weddings.
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 aren’t aware of.”
Current HMRC rules permit parents to give up to £5,000 tax-free to a child entering marriage or civil partnership, with grandparents allowed £2,500 and other individuals £1,000.
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When these wedding-specific allowances are combined with the standard £3,000 annual exemption per person, both sets of parents can collectively contribute £16,000 towards a couple’s nuptials without incurring any inheritance tax liability.
Given that typical UK weddings now cost approximately £22,000, this represents a substantial opportunity for tax-efficient family support.
Beyond wedding gifts, another powerful but frequently overlooked tool exists for estate planning: the normal expenditure out of income exemption. This rule allows individuals to make unlimited tax-free gifts from their regular surplus income, provided doing so does not diminish their usual standard of living.
Ms Pugh said: “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.”
Saltus data indicates that high net worth individuals currently gift an average of £630 monthly towards family members’ rent or mortgage costs, suggesting many could contribute more if they better understood this exemption.