The 40% Inheritance Tax is so high that it encourages an entire industry of expensive lawyers and accountants to help people avoid it. The result? The government collects less than it should, and only those who can't afford complex advice pay the full, unfair rate.

A common-sense solution is to cut the rate in half, to a much fairer 20%. At this level, more families will see it as a reasonable final contribution and simply pay it. It’s a pragmatic approach that ends the avoidance and evasion game.

Inheritance Tax can be avoided completely by gifting wealth before 7 years from death, the higher the rate the more incentive there is to do so and the higher the wealth the more change of moving out of the country legally so avoiding the tax altogether.

The result is a win-win: the system becomes fairer, and by ensuring more people pay, the total tax take for the country actually goes up.

Inheritance Tax (IHT) in the UK can be significantly reduced—or even avoided—through strategic gifting and relocation planning

Under the 7-year rule, gifts made during a person’s lifetime are exempt from IHT if the donor survives for seven years after making the gift. If death occurs within that period, taper relief applies, reducing the tax rate on gifts made more than three years before death—from 40% down to 8%.

The higher the IHT rate, the greater the incentive for individuals to gift wealth early or explore alternative strategies. Wealthier individuals, in particular, are more likely to engage in international relocation to mitigate tax exposure. This trend has accelerated due to recent reforms:

As of April 2025, the UK has abolished the concept of domicile for tax purposes, replacing it with a Long-Term Resident (LTR) test. Anyone who has lived in the UK for 10 out of the last 20 years is now subject to IHT on their worldwide estate—even after leaving the country. This introduces an “IHT tail”, meaning former residents may remain liable for UK IHT for up to 10 years after departure, depending on their residence history. It is likely this will be tested in the courts, as it has retrospective elements.

However, if an individual has moved abroad, dies outside the UK, and holds assets offshore, it becomes extremely difficult for HMRC to monitor and enforce the collection of IHT that may theoretically be due, especially when those assets are located in jurisdictions with limited transparency or weak tax cooperation agreements.

These changes have contributed to a record outflow of wealthy individuals, with the UK projected to lose 16,500 millionaires in 2025 alone, surpassing even China in net millionaire migration. Many are relocating to jurisdictions with more favorable tax regimes, such as the UAE, Greece, Portugal, and Switzerland.