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In the latest Accountable by Shorts podcast episode, Shorts Tax Partner Craig Walker and Shorts Private Client Senior Manager Mark Trevena explain why Inheritance Tax (IHT) is sometimes described — half‑jokingly, half‑accurately — as a 'voluntary tax'. Not because anyone wants to pay it, but because with the right planning, much of it can often be reduced or avoided. Yet many people don’t take advantage of the rules designed to help them.
Discover why IHT earns this unusual label and what planning you can do now to avoid an unexpected bill.
IHT is surprisingly avoidable with simple, early planning
Mark makes the point clearly in the podcast: IHT is 'one of the easiest taxes to avoid a liability on'. Much of the tax can be mitigated through:
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the correct use of allowances
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lifetime gifting
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a properly drafted Will
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structuring assets in a tax-efficient manner
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seeking advice early, not late
None of these strategies require complex schemes or offshore manoeuvres. They simply require forward planning, which is exactly where many households fall short.
Most people leave planning far too late
Inheritance Tax is emotional. As Craig notes, people avoid thinking about it because it forces them to confront their own mortality. The consequence? They only look at IHT when it’s too late to make meaningful changes.
For example:
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Gifts only become fully outside the estate after seven years.
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Complex estates take time to review and structure properly.
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Last‑minute Wills often contain errors or create tax consequences.
This reluctance to plan early is a major reason why an avoidable tax becomes an unavoidable one.
Lifetime gifting rules are powerful... when used correctly
A core reason IHT is considered “voluntary” is the generous structure of lifetime gifts. As the podcast explains:
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Gifts can fall fully outside the estate if the donor survives seven years.
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Taper relief can reduce tax on certain gifts made between years three and seven.
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Annual gift exemptions and wedding gift allowances can be used every year.
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Regular gifts from surplus income can be entirely IHT‑free.
Many people never use these mechanisms simply because they don’t understand them or don’t keep the necessary records. The opportunities are there, but they must be used intentionally.
A Will alone does not prevent unnecessary tax
Many people assume writing a Will solves everything. The reality though is a Will alone isn't enough to efficiently avoid Inheritance Tax.
While a Will ensures your wishes are respected and followed, it doesn't plan how to gift items to loved ones so they reap the full benefits of your estate. That requires estate planning, effectively a road map a tax adviser will create with you to ensure your assets are gifted in an efficient manner.
A Will and tax planning must work together. When they don’t, a tax that could have been minimised becomes inevitable.
Planning gives clarity when tax can’t be eliminated
Another key reason IHT is nicknamed 'voluntary' is that even when people can’t reduce the tax, planning allows them to understand, prepare for and manage it.
As Mark emphasises in the podcast: 'there’s always something that can be done'. Sometimes that "something" is ensuring there’s enough liquidity to pay the bill.
Knowing what your estate will face is far better than leaving your family to discover it under stressful circumstances.
The real meaning behind “voluntary”
Calling IHT voluntary doesn’t deny the emotional and financial weight the tax carries. Instead, it reflects a simple truth Craig and Mark wish more people know about Inheritance Tax: much of IHT liability arises not from the rules themselves, but from people choosing not to plan.
The government has built in reliefs, exemptions and long‑term strategies. But:
- If you don’t use the Seven‑Year Rule...
- If you don’t use annual exemptions…
- If you don’t draft a proper Will…
- If you don’t seek advice early…
…you lose the very tools designed to protect your estate.
That’s why IHT is sometimes called 'voluntary': because the tax is often the result of inaction, not inevitability.
For a deeper explanation (and plenty of candid examples) the latest episode of Accountable by Shorts covers the topic in full. If you're ready to start thinking proactively about Inheritance Tax, contact Shorts' Personal Tax Planning team to plan your estate strategically.
Mark Trevenna
As a Private Client Senior Manager at Shorts and Chartered Tax Adviser (CTA), Mark regularly advises individuals and trustees on tax compliance and improving the tax efficiencies of the trusts and their estates. Mark has over 17 years of experience advising clients on Inheritance Tax and Capital Gains Tax.
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