Have you thought about inheritance tax and your legacy?

Inheritance Tax (IHT) is often an overlooked aspect of financial planning, but for families in the UK, it can significantly impact the wealth passed down to your children and future generations. Without proper planning, there may be unexpected tax bills, reducing the amount of inheritance they receive. All of this tax admin at time when your priority needs to be grieving and being with your loved ones.

Understand Inheritance Tax

In the UK, IHT is charged at 40% on estates valued above the current threshold of £325,000 (or £500,000 if the residence nil-rate band applies) for an individual. Anything above these thresholds could be subject to taxation, making it crucial to plan ahead and ensure beneficiaries retain as much of the estate as possible.

Why Inheritance Tax Planning Matters

Minimise Tax Liabilities – Careful planning can help reduce or even eliminate IHT liability through allowances, exemptions, and gifting strategies.

Preserve Family Wealth – Without a plan in place, a significant portion of an assets may be lost to tax, diminishing the financial support intended for loved ones.

Make Use of Reliefs and Exemptions – There are various reliefs, such as Business Property Relief and Agricultural Property Relief, that can lower IHT liability if applied correctly. Noting that these reliefs are changing from April 2026.

Protect Future Generations – Estate planning ensures a smoother transfer of assets, avoiding potential financial strain on your family.

Charitable Giving Benefits – Leaving part of an estate to charity can reduce the IHT rate to 36% on the remaining taxable estate.

Steps to Effective IHT Planning

Make a Will – A clear, up-to-date will ensures assets are distributed as intended and maximises tax-efficient strategies.

Utilise Gifting – Gifts made more than seven years before death are usually exempt from IHT.

Consider Trusts – Trusts can be used to manage assets and potentially reduce IHT liabilities.

Seek Professional Advice – A financial advisor or estate planner can help tailor strategies to individual circumstances.

Inheritance Tax planning is essential for anyone looking to safeguard their legacy and provide for their family’s future. The best results we see are with clients who take proactive steps, individuals can ensure their wealth is distributed according to their wishes while minimising the tax burden on loved ones. The earlier the planning starts, the more effective it can be in preserving hard-earned assets.

If you would like to understand your inheritance tax exposure and areas in which you can make some pro active planning, please get in touch and work with us to guide you through.