What Is Inheritance Tax Planning?
Inheritance Tax (IHT) Planning is the process of reducing the amount of tax your estate may owe, so that your loved ones can inherit more of what you’ve worked hard to build.
With the right planning in place, it’s possible to significantly reduce—or even eliminate—IHT liability over time. In fact, many estate planners consider Inheritance Tax a voluntary tax, because with the right advice, much of it can be avoided legally and effectively.
Put simply, IHT is a tax on the value of your estate when you pass away. Your estate is calculated as:
Assets – Liabilities = Estate Value
Everyone is entitled to a tax-free allowance (known as the nil-rate band) and, if applicable, an additional residence nil-rate band. Any part of your estate that exceeds these thresholds is taxed—currently at a rate of 40%.
With smart planning, you can make sure more of your estate goes to the people you care about, and less to the taxman.
How Much Inheritance Tax Will You Pay?
The amount of Inheritance Tax (IHT) payable on your estate depends on several factors—including the size and structure of your estate, who you leave it to, and what planning you’ve already done.
Generally, the larger the estate, the higher the potential tax bill. However, with the right planning, it’s possible to significantly reduce—or even eliminate—IHT. In fact, many of our clients with substantial estates pay very little tax thanks to the strategies we help them put in place.
Here are a few key points to consider:
- Everyone has a tax-free allowance, known as the nil-rate band.
- Many people also benefit from an additional residence nil-rate band, depending on how their estate is passed on.
- Anything left to a spouse or civil partner is generally exempt from IHT, and your unused allowances can often be transferred—giving your beneficiaries up to double the tax-free amount in the future.
To understand exactly how much IHT may be due on your estate—and explore the most effective ways to reduce it—get in touch with us for expert advice and a free consultation.
Ways We Can Help
Our experienced Estate Planners take the time to understand your current situation and your future goals, so we can guide you through the best ways to reduce your Inheritance Tax (IHT) liability and ensure more of your estate passes to the people you care about.
There are a potentially a number of effective strategies we may explore, including:
- Tax Efficient Wills
- Strategic Gifting.
- Restructuring Portfolios
- Consideration of Life Insurance for Inheritance Tax cover.
- Deeds of Variation.
- Lifetime Trust Planning.
IHT planning can be complex and requires a thoughtful, tailored approach.
Whether you’re just getting started or reviewing an existing plan, we’re here to make the process straightforward—and give you peace of mind for the future.