Inheritance Tax is one of the most unpopular and emotive taxes collected by HMRC. Even though it’s paid by a small percentage of the population, the taxman collected £5.4bn in 2018/19, a figure which has doubled in eight years.

It’s complexity can scare, but new Chancellor Rishi Sunak could introduce a number of simple measures that would provide a ‘feel good’ element to the budget.

Here are five changes NFU Mutual Chartered financial planner Sean McCann says Mr Sunak could make on March 11.

1. Holiday Lets

Sean said: “Farmers have diversified into holiday lets for many years. They have significant tax benefits over Buy To Lets. HMRC treat them as a trade for Income Tax and Capital Gains Tax.

“But when it comes to Inheritance Tax the rules are different. In many cases they are deemed to be an ‘investment’ which means they can be subject to tax on death.

“We’d like to see this contradiction amended to stop any more families receiving a surprise tax bill when a loved one dies.”

2. Don’t penalise the life-long farmer

Sean said: ‘’Farmers can potentially benefit from Agricultural Property Relief on their farm house meaning that in many cases it is free from Inheritance Tax.

“One of the conditions for getting the relief is that the house must be ‘occupied for agricultural purposes’. Problems can arise if the farmer has to move out to go into care and doesn’t return to live in the house.

“At the moment HMRC review on a case by case basis, but we’d like to see clear guidance to make it easier for farming families to plan.”

3. Scrap the ‘Residence nil rate Band’ and increase the tax-free exemption on death to £500,000 for everyone

Sean said: “Former Chancellor George Osborn promised families they could leave £1million free from IHT – but the Residence Nil-Rate Band is far too complicated and penalises those without children.

“Mr Sunak should remove the Residence Nil-Rate Band, and raise the tax-free amount everyone can leave behind from £325,000 to £500,000. This would be both easier to understand and fairer for everyone.”

4. Don’t charge IHT on Life Insurance

Sean said; ‘’If a life insurance policy isn’t written in trust, your family could lose 40 per cent of the pay out in inheritance tax.

“In 2016/17, there were 7,970 estates which paid a total of £774million in inheritance tax on life insurance policies.

“Making all life insurance policies free of IHT is a simple change that will mean those who take out cover to protect their families get the full benefit, rather than losing a large chunk in tax because they were not made aware of the need for a trust.”

5. Make tax free gifting easier

Sean said: ‘’There are a myriad of exempt gifts including ‘gifts on marriage’, ‘small gifts’, ‘gifts out of normal expenditure’, and even ‘Gifts to political parties’. They all have different rules and limits.

“Sweeping these away in favour of one annual simple annual tax-free gifting allowance of £15,000 would be easier to understand, encouraging parents and grandparents to pass wealth on during their lifetime.”