Well, from time to time some politician calls for reducing the tax but I doubt the Government will budge; they made over £3 billion pounds from the IHT just last year alone.
There will be a change soon - the 0% line will be raised from £325,000 to £350,000, but that's hardly a drastic one.
The IHT concerns only assets based in the United Kingdom, so foreigners, Royals or not, shouldn’t worry much about it.
And of course, there are ways of 'avoiding' the tax: a really shrewd lawyer will tell you all about those ways, but you've got to be able to afford one.
One of such ways is leaving the inheritance in trust funds. If you leave the assets in trust funds, with the beneficiary eventually gaining full access to the fund, it may prove to be disadvantageous in the long run (for the beneficiary). But if you leave the assets in DGT (Discounted Gift Trust – that’s when the beneficiary doesn't have access to main capital but gets either an allowance or percentage from the profits), then the tax can be avoided.
There are also exceptions, like money left to charities, donations, small bequests, etc., which are not subject to the Tax.
The Royal Family does pay the IHT, however there was an exception; in 1993, the Queen had a private agreement with then PM John Major, according to which the Queen Mother’s inheritance would not be subject to the Tax (the agreement was reached at the same time as the decision that the Queen’s personal income will be taxed as that of any other British subject). The Queen Mother also made full use of the Trust Funds option.
The only exceptions (for the RF) are bequests from Sovereign to Sovereign, which are exempt. This, of course, leaves a nice loophole; the Queen, for example, can leave
everything to Charles but make
private bequests for her other children (say, a parure here, a nice diamond necklace there...).