It has long been argued that inheritance tax (IHT) is one of the easiest taxes to avoid: there is a nil-rate band of £325,000 for each person, making it £650,000 for a married couple. 

In addition, an exemption of £175,000 for property owners is coming into place in the next few years.

But aside for making the most of the nil-rate band, there are numerous ways to mitigate IHT. For example, widowed spouses can carry forward their deceased partner’s unused nil-rate band. Then there are the more adventurous investment products that can limit the effects of IHT on one’s estate, in exchange for investing in a young company.

But IHT has become a political football in recent years. The problem is that, historically, it was a tax that applied solely to wealthy people. However, as property prices have increased, more and more people have started to fall outside the nil‑rate band.

Many Britons – at least those of the baby boomer generation – are proud homeowners, and their property is often by far their largest asset. As such, it is something they wish to pass on to their heirs. When they become aware that many properties of a reasonable size are likely to be taxed at 40 per cent, they quite rightly complain about it. 

In other words, it is no longer only aristocrats who have to put up with crippling ‘death duties’.

Politicians have tried to address this, mindful of the property-owning electorate. So, there are ways to get around IHT. 

One is business relief, formerly known as business property relief, which is used to facilitate investment in small and unquoted companies. Investments held for more than two years qualify for 100 per cent IHT mitigation.

There are more complex tools available for property-owners, such as holding property in trust, which requires the assistance of specialists to set up.

In this special report, we outline the dimensions of IHT, and the various ways of mitigating it.

Melanie Tringham is features editor of Financial Adviser