Rachel Reeves is reforming the UK’s tax system (Image: Getty)
Brits can take advantage of a £16,000 allowance in the face of a hated tax, an expert has said. HMRC data showed that inheritance tax (IHT) receipts for between May 2025 and April 2026 reached £8.4billion, up from £8.3billion the year before. Research from wealth management firm Saltus found that retirees see IHT as the “most unfair” tax in Britain, and want it scrapped entirely.
It added that high net worth individuals (HNWIs) say IHT should be cut in half, with just 18% saying the current threshold is fair. The company highlighted “little known” IHT exemptions, including the £16,000 wedding gift allowance and the unlimited “regular income” rule, as it aims to help families “pass on wealth more efficiently”.
Alex Pugh, 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.
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Brits have expressed their disdain for inheritance tax (Image: Getty)
“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.”
Ms Pugh added: “Many families are surprised at how much can be given away tax free when these allowances are combined. At a time when wedding costs are rising, this can be a simple and effective way of providing meaningful financial support without creating unintended tax consequences.
“Our data shows that, of those parents that gifted money for a wedding over the past five years, they gave 5,600 on average, suggesting that the combined wedding allowance remains a relatively underused relief.”
Current rules mean parents can gift up to £5,000 to a child getting married or entering a civil partnership, while grandparents can give £2,500 and any other individual £1,000 – all free from IHT.
When combined with the standard annual exemption of £3,000 per person, this means a couple’s two sets of parents can jointly gift up to £16,000 in a single tax year towards a wedding without triggering any IHT liability.
This total can be increased further if unused annual exemptions are carried forward from the previous year.
In its latest Budget, the Treasury said: “The government is asking everyone to contribute to support economic stability and protect public services.” The headline rates of income tax, national insurance contributions (NICs) and VAT were not to be increased, but income tax thresholds and the equivalent NICs thresholds for employees and self-employed individuals would be maintained at their current levels for a further three years from April 2028 to April 2031.
As would be the case for IHT thresholds for a further year to April 2031.
The document added that ministers would seek legislate to “prevent inheritance tax avoidance through certain loopholes, including ensuring UK agricultural property held via non-UK entities is treated as UK-situated addressing changes in status of trust assets before and exit charge, and restricting charity exemptions to direct gifts to UK charities and clubs”.
Mrs 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.
“Also, there is no threshold as long as the person making the gift is still able to maintain their standard of living without having to draw upon capital from elsewhere.
“Our data shows that the average gifted amount for rent or a mortgage is 630 per month amongst high net worth individuals, suggesting that many would be able to gift more if they understood the surplus income rule better.”
