Example Case Study 1:

Mr & Mrs Jones have assets, including the family home, totalling £800,000 which they leave it to their daughter, Rosie. The Joneses do not pay IHT on their death as their tax-free allowance would be £1 million. However, when their daughter passes, she has bought her own property and worked hard to set up a successful business..

The estate Rosie has accrued is also valued at £800,000. Even if Rosie receives the full tax-free allowance of £1million, her estate plus the inheritance from her parents now takes her over the allowance by £600,000. This would generate an Inheritance Tax bill on Rosie's death of £240,000 even though neither Rosie nor her parents breeched the IHT thresholds on their own estates.