Inheritance tax ‘may be cut dramatically’

Careful planning can cut inheritance tax bills "dramatically", it has been advised.

By employing a variety of different techniques, the proportion of an estate lost through inheritance tax may be minimised, according to Clerical Medical.

The pensions and investments provider claims that exemptions and discretionary trusts may eliminate parts of the inheritance from the total on which tax must be paid.

"Good financial advice and planning can help customers reduce their inheritance liabilities by using a simple estate planning strategy," suggests chartered tax adviser Nick Williams.

"It’s relatively simple for people to take advantage of a range of tax exemptions and products to make sure that the maximum amount of wealth is passed to the next generation."

The firm suggests that using a discretionary trust could allow a portion of a legacy to be counted as a debt against the surviving partner’s estate, thus reducing the amount of inheritance tax to be paid when the partner died.

Financial services firm Edward Jones recently warned that inheritance tax is affecting an increasingly wide range of Britons due to rising house prices.