SERVICESINHERITANCE TAX PLANNING
Inheritance Tax Planning
IHT is a tax paid on the value of an estate that passes on death, minus any reliefs and exemptions you may qualify for. This fact sheet will give you a clear picture of what that means for you.
We understand navigating Inheritance Tax (IHT) can feel a little overwhelming. The good news is there are several ways you can potentially reduce your IHT liability.
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THRESHOLDS AND RATES
What is Inheritance Tax?
There’s a good chunk of your estate that’s typically free from IHT.
- 01
The nil-rate band
The current threshold for Inheritance Tax is £325,000, known as the "nil-rate band." This means the first £325,000 is typically free from IHT.
- 02
The rate above it
If your estate’s net value after reliefs and exemptions exceeds this amount, IHT applies at a rate of 40% on anything above that threshold.
- 03
Reducing your Inheritance Tax bill
We understand navigating Inheritance Tax (IHT) can feel a little overwhelming. The good news is there are several ways you can potentially reduce your IHT liability. Download our guide which aims to simplify things, explain key points, and show you how we can help ensure your wishes are met.
- 01
Does the 7-year rule always remove Inheritance Tax on gifts?
Many believe the 7-year rule wipes out Inheritance Tax on gifts, but if you still benefit from what you’ve given away, HMRC may treat it as though you never gave it up. This is called a Gift with Reservation of Benefit (GWR). Common traps include giving your home to children or putting it into a trust but continuing to live there rent-free. GWR rules can lead to unexpected tax bills and other risks, so get advice before making large gifts.
- 02
Do I leave my pension in my Will?
Usually, the answer is no. Most pensions are paid under the scheme rules, guided by your nomination or expression-of-wish form. However, from 6 April 2027, most unused pension funds will be included when calculating Inheritance Tax, which is why your Will, pension nominations and wider estate plan should all be reviewed together.
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Does gifting an asset outright take it out of my estate?
Some people expect that gifting an asset outright will remove the asset from their estate and will therefore have the effect of reducing their estate for Inheritance Tax purposes. However, this is not always the case. There can be other tax considerations as well, such as the triggering of a Capital Gains Tax charge. Tax implications can be complex, and it is important that advice is sought before any gifts are made.
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Let’s work out where you stand.
Every estate is different, and the reliefs and exemptions that apply to yours depend on your circumstances. A free, no-obligation conversation is the quickest way to find out what applies to you.
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