The last Budget of this Parliament has frozen the inheritance tax nil-rate band for the next four years which will mean that more estates will suffer an inheritance tax charge on death.
In the 2009 pre-Budget report, Chancellor Darling said he would introduce legislation in 2010 to freeze the limit of the inheritance tax nil-rate band for the tax year 2010/11 at its current level of £325,000.
He has now extended this to cover the next four tax years, so the nil-rate band will not be increased again until tax year 2015/16.
It is interesting to contrast this with the approach announced by the Conservatives, which says they would raise the nil-rate band to £1m but it remains to be seen if such an increase would be implemented.
It is crucial for individuals to seek professional advice on how to mitigate their potential inheritance tax liability, otherwise their estates could face an inheritance tax charge at 40 per cent simply because their estates have grown faster than the nil-rate band.