Middle classes hit hardest by IHT The Office of Tax Simplification’s review of IHT reveals people inheriting some of the largest estates in the country are paying as little as 10% tax on their windfall. The study shows that although the headline rate payable is 40%, the rate actually paid peaks at 20%, falling to 10% for the largest estates. The OTS writes: "One might expect the average effective tax rate to be closer to the headline rate of 40% for higher value estates, but this is not the case. One of the main reasons is the spouse or civil partners exemption and other reliefs… Lower value estates mostly consist of cash and residential property, which do not commonly attract relief.” The OTS’s main recommendation in the review is that the government should introduce a simple, streamlined, digital system for IHT. It highlighted the huge administrative burden faced by those executing a will without hiring an adviser, with 38% of people in this category spending 50 hours or more on the task. Elsewhere, the FT provides a detailed overview of the OTS’s consultation.