It is also quite penal, with a 40% tax charge levied on assets in excess of the IHT threshold, which at present stands at £325,000 per person.
However, there is no IHT charged on transfers between spouses and there are other allowances on things such as a portion of your own home, certain gifts and charitable payments which all help to make IHT avoidable.
It should also be noted that certain assets are IHTfree. One of the key ones is Personal Pensions. Therefore, if IHT is a concern to you, it may be better to draw your income from another asset such as cash accounts or ISAs and avoid using your pension for income (which we realise sounds a little contradictory).
Careful planning over a period of time can ensure that IHT is of no concern to you, but you must seek advice to ensure that the biggest beneficiary of your estate on death isn’t HMRC.