ALL ABOUT inheritance tax

Seventy-one per cent of people admit they don't understand how IHT works. Here's the low-down

- CAROLINE BLOOR

You probably think there's no need to read up on Inheritance Tax (IHT). It feels like a problem for the super-rich. But with property prices rising, IHT thresholds frozen until 2030, and pensions expected to count towards IHT within the next two years, more families are quietly slipping into the net. And yet, in a new report from Schroders Personal Wealth, 71% of people admit they don't understand how Inheritance Tax (IHT) works*.

Currently around 1 in 20 estates pay IHT**, but that is set to rise. 'From April 2027, most unused pension pots will be treated as part of your estate for IHT purposes and potentially subject to the standard rate, unless passed to a spouse.

It's a seismic shift that many people simply haven't clocked yet,' says Rachael Griffin, tax expert at Quilter.