In this year's Budget the Chancellor announced the inheritance tax (IHT) nil rate bands for 2005/06 and the next two tax years. The nil rate band is the threshold above which your estate is subject to IHT at the flat rate of 40%. For 2005/06 the nil rate band is £275,000, rising to £285,000 next year and a nice round £300,000 in 2007/08.

These increases average about 4.5% a year, which is more than the current rate of overall inflation and the government's target of about 2.5%. However, if you are a homeowner, there is little to celebrate. Since 1996, the increase in the nil rate band has singularly failed to keep pace with rising house prices, dragging more people deeper into the 40% tax band.

In April 1996, the average house price in the UK was just over a quarter of the then £200,000 nil rate band, according to Nationwide in March 2005. Today the average price of a house is more than half the amount of the nil rate band. In some parts of the country, the position is more extreme: in London the average price is now about 85% of the nil rate band, while the average detached house is now worth far more than the nil rate band.

Tax rules are subject to change, but if the value of your home — or other assets — means that your estate will be above the nil rate band, ask us for help. There are many IHT plans that could make a big difference. Not all products used in inheritance tax planning are regulated by the FSA.