The four year freeze on the £325,000 nil rate for inheritance tax announced in the Budget has highlighted the importance of inheritance tax planning.

There are huge sums of money at stake. In 2008 alone HM Revenue & Customs netted £3.8billion form this one tax.

Traditional inheritance tax planning techniques take up to 7 years to become fully effective, which is no good for people who want to know their estate is protected before then.

There is now a plethora of financial planning products which promise to reduce a tax payer’s inheritance tax liability. Those making use of the Business Property Relief opportunities mean that such investments which qualify can offer full relief of inheritance tax after only two years.

Unfortunately, too many inheritance tax based investments fail to realise that the number one priority of many an investor seeking to mitigate his or her inheritance tax liability is to also preserve capital and restrict real investment risk. Investments that are asset backed or with strong contractual revenue streams can help to fulfil these objectives.

After all, the very reason such an individual is in the market for an inheritance tax mitigating product in the first place is the fact that they want to preserve the value of their estate as much as possible.