However, prior to the implementation of the new rules, the IHT tax free thresholds remain the same. Hargreaves Lansdown has put together a 5-point action plan to reduce your IHT bill and keep wealth in the family ahead of the changes in two years’ time:

• Ensure your will is up to date

A properly drafted will provides clear instructions, which makes life easier for those you leave behind. It can also save inheritance tax by ensuring that legacies are passed on as tax efficiently as possible. With all the changes to the inheritability of ISA, pensions and soon to be, the family home, it is important to review your estate plans regularly.

• Pay into a pension

In addition to tax relief on the contributions and almost tax-free growth, pensions are no longer subject to inheritance tax. The value of a defined contribution pension plan such as a stakeholder or SIPP is tax-free on death up to age 75 (assuming no Lifetime Allowance issues) and beneficiaries pay marginal rate income tax on death post age 75

• Make gifts to reduce your taxable estate

The government limits exempt gifts, those which are immediately free from inheritance tax, to avoid excessive “death-bed” planning. In the main, exempt gifts slow the growth of the taxable part of the estate, rather than significantly reducing the overall IHT liability. That said they remain an important part of the planning. Exempt gifts include the annual exemption of £3,000 a year, gifts of up to £5,000 on marriage and unlimited gifts from excess income. Gifts can be made direct or into trusts or investment schemes such as Junior ISA or Junior SIPP.

It’s important to make sure you don’t give too much away.

• Invest in inheritance tax free assets

Certain assets are free from inheritance tax after a two year holding period under Business Property Relief provisions. These include qualifying AIM stock, shares in certain unquoted companies and shares in Enterprise Investment Schemes. Liquidity is often an issue with investments of this type and investors should be careful not to let the tax tail wag the investment dog.

• Charitable giving

Gifts to registered charities are free from IHT and providing these gifts total 10% of the taxable value of an estate, will also reduce the rate of IHT from 40% to 36%. Investors can also gift shares or funds to charity without incurring capital gains or income tax charges and the value of the holdings will also be IHT free.