What can I do to reduce the size of the Problem?

* You should start by making (or reviewing) your Will. Does it still reflect your wishes and your financial circumstances?

* Consider making gifts within the current gifting rules. For example, you can gift £3,000 in any one tax year to any group of people (such as children) and this is exempt from IHT. There are a number of other gifts that qualify for exemption including making gifts out of surplus income as long as they are regular and not detrimental to your normal standard of living (take care as the rules on this changed on 1 March 2011).

* Consider making gifts that are 'Potentially Exempt Transfers'. If you survive seven years they will be outside of your estate. If you die within seven years, there is a sliding scale of relief from the full 40% rate of tax.

* Consider a Joint Life Second Death Life Assurance plan. This will pay out a lump sum on the death of the last surviving spouse which can be used to settle any potential liability. The costs of this cover are surprisingly low relative to the size of the payment.

* Invest in stocks and shares that qualify for Business Property Relief. Once these are owned for two years, they attract valuable relief.

* Use a trust structure to remove assets from your estate. There are a number in regular use. We can tell you which one is most suitable.

* Make sure that you take advantage of the spousal exemption. If your spouse died after 21 March 1972 and didn't make full use of their Inheritance Tax Reliefs (perhaps because they left everything to the surviving spouse) you can now utilize their unused reliefs as well as your own.

SUMMARY

There are plenty of planning options. CLA IFP can advise on the best ones for you.