Inheritance tax mistake costs families £350m – are you making this simple error?

Life insurance can provide your loved ones with a vital safety net if the worst happens. But to avoid inheritance tax on the pay out, you must write the policy in trust

Trust documents being signed
Life insurance can provide your loved ones with a vital safety net if the worst happens. But to avoid inheritance tax on the pay out, you must write the policy in trust
(Image credit: Getty Images)

Thousands of families are overpaying inheritance tax on life insurance policies, according to new figures, because they make a simple mistake when they take them out.

Nearly 7,500 families paid inheritance tax on life insurance policies in 2022/23, according to HMRC. But many would have escaped a bill if their policy was written into trust.

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Laura Miller

Laura Miller is an experienced financial and business journalist. Formerly on staff at the Daily Telegraph, her freelance work now appears in the money pages of all the national newspapers. She endeavours to make money issues easy to understand for everyone, and to do justice to the people who regularly trust her to tell their stories. She lives by the sea in Aberystwyth. You can find her tweeting @thatlaurawrites