Inheritance Tax Planning

What is Inheritance Tax?

In the UK, inheritance tax (IHT) is charged on your estate (property, money, possessions) after death. It is overseen by HM Revenue and Customs.

If you have a large estate, it’s likely to be subject to inheritance tax at 40%.
This applies to estates above £325,000 threshold (nil-rate band)
Additional allowances may apply (eg passing a home to children)

Your family could end up inheriting a lot less as a result. Inheritance tax is only due if your estate exceeds a certain threshold, but more estates are having to pay it because house prices have risen a lot over the past few years. Even if your estate is not liable to pay inheritance tax today, it could by the time you pass away.

What does ‘Planning’ involve?

Inheritance tax planning is about reducing the taxable value of your estate using the following legal strategies.

Gifting Assets Early

You can give money away or assets whilst alive
If you survive 7 years after gifting, it usually becomes tax-free
Includes annual gift allowances (£3,000 per year)

Using Trusts

Assets placed in a Trust may no longer count as part of your estate
Helps control how and when beneficiaries receive assets
often used for children or complex estates

Making a Will

Ensures assets are distributed efficiently
can help take advantage of tax allowances
without a will, rules of intestacy apply (less control, possible higher tax)

Leaving Money to Charity

Donations to registered charities are tax-free
If you leave 10% or more of your estate to charity, IHT rate can drop to 36%

Using Allowances and Reliefs

Spouse exemption: these are tax free
Residence nil-rate band: extra allowance when passing your home to direct descendants
Business or agricultural relief: reduces tax on certain assets

Without planning, a large portion of your estate could go to tax. We can give you bespoke advice on ways to reduce your inheritance tax liability.

Wishes

Without a Will, when you’re gone your wishes won’t be considered. The legal rules of intestacy take over, which can lead to unintended consequences and cause stress and disagreements among family members. Having a Will gives you peace of mind that your gift will go to your loved ones. It’s a simple way to make sure your wishes are honoured.

Single Wills

A single Will is created by one person and outlines their individual wishes for how their estate should be handled after they pass away. It’s ideal for people who are not in a relationship, or for those who have different wishes from their partner.

Mirrored Wills

Mirrored Wills are two separate but almost identical Wills, usually made by couples. Each person leaves their estate to the other, and then to the same beneficiaries (like children) if both pass away. They’re a popular choice for married couples or partners who share the same wishes.
Mirrored wills are not legally linked — either person can change their will at any time without telling the other. Both types of wills must meet legal requirements to be valid, including being signed and witnessed properly.

About Wills:

Wills

A Will sets out how you want your money, property, and possessions to be distributed after your death and allows you to appoint guardians for children under the age of 18.

We can’t predict when our time will come to an end. You’ve worked hard every day, putting in the effort to get where you are now. Ultimately, we want to share the results of our lifelong work with our loved ones. Giving the product of our life’s work as a gift is the biggest and best thing we can do – it’s everything we own. It’s crucial to make sure this is done right – by writing a Will.