Inheritance Tax Planning

What is Inheritance Tax?​​

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Inheritance Tax is a tax on the value of your estate when you pass away. This includes your home, savings, investments and possessions. The standard rate is 40 percent on anything above the tax-free thresholds.

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Most estates benefit from a Nil Rate Band of £325,000 and a Residence Nil Rate Band of up to £175,000 when passing on the main home to children or grandchildren. For married couples and civil partners, these allowances are transferable, allowing a potential combined tax-free threshold of up to £1 million.

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However, the Residence Nil Rate Band is gradually reduced for estates valued over £2 million and is lost entirely when the estate exceeds £2.35 million.

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Lifetime gifts may also be subject to Inheritance Tax if made within seven years of death. Good planning can significantly reduce the impact of tax and ensure more of your wealth passes to the people you care about.

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Why It Matters and What Is Changing

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More families are being drawn into Inheritance Tax due to rising asset values and frozen allowances. For business owners, landowners and pension savers, recent and upcoming rule changes make planning even more important.

 

From 6 April 2025, the rules governing Business Property Relief and Agricultural Property Relief were tightened. These reliefs previously reduced or eliminated Inheritance Tax on qualifying business and farming assets. Under the new rules, the criteria have become more restrictive, and some assets no longer qualify. As a result, many estates that once expected full relief now face partial taxation. For some families, this creates an effective Inheritance Tax rate of 20 percent on asset value above the £1 million threshold.

 

In the 2024 Autumn Budget, Chancellor Rachel Reeves announced that from 6 April 2027, unused pension savings may be included in your estate for IHT purposes. Pensions left to a spouse or civil partner will remain exempt, but where pensions are passed to children or other beneficiaries, the value would now be included in the taxable estate.

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This represents a significant shift from the current rules, where pensions are typically inherited free of IHT. In some cases, the inclusion of the pension fund may push the estate above the £2 million taper threshold, causing the Residence Nil Rate Band to be reduced or lost entirely.

 

Families who previously relied on pensions as a tax-free legacies may now face unexpected tax bills without proper planning.

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How We Can Help

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✅Clarify how inheritance tax applies to your estate

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✅Maximise use of available allowances

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✅Plan around upcoming rule changes

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✅Review use of potentially exempt transfers (PETs) and Advise on lifetime gifting strategies

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✅Consider business and/or agricultural reliefs

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✅Review ownership of property and joint assets

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✅Use of family investment companies (FICs)

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✅ Coordinate with your solicitor and IFA

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