What Is Inheritance Tax?
Current thresholds:
- Nil-Rate Band: £325,000
- Residence Nil-Rate Band: £175,000 (when passing your home to children or grandchildren)
- For married couples or civil partners, unused allowances can be transferred, allowing up to £1 million tax-free.
What’s Changing?
Several policy updates are on the horizon, and they could significantly affect your estate planning:
1. Agricultural and Business Property Relief Caps (April 2026)
Currently, there’s no cap on these reliefs. Soon, they will be capped at £1 million, and any value above this could be taxed at 20%.
2. Pension Rule Changes (April 2027)
Until now, unused defined-contribution pensions could be passed on tax-free. This is set to change, with pensions forming part of the taxable estate.
3. Non-Domicile Status Reform (April 2025)
Non-doms who have lived in the UK for more than 10 years will be taxed on their worldwide assets.
The Risk of Doing Nothing
Many people don’t realise that without planning, their heirs may face large tax bills and be forced to sell family assets, businesses or property. But there are proven ways to reduce this burden.
Top Tip
Lee Goggin
Co-Founder
How a Wealth Manager Can Help
Lifetime Gifting
Giving away assets during your lifetime is one of the most effective ways to reduce IHT.- Annual gifts up to £3,000 are exempt
- Small gifts of £250 per person per year are also free of IHT
- Larger gifts may be exempt if you survive seven years (known as Potentially Exempt Transfers)
- Regular gifts from surplus income are immediately exempt if done correctly
Using Trusts Wisely
Trusts can be a tax-efficient way to pass on wealth without giving up total control. Options include:- Discretionary Trusts
- Bare Trusts (for children)
- Loan Trusts or Discounted Gift Trusts for those looking to retain access to income
Taking Out Life Insurance
A whole-of-life insurance policy can cover the IHT bill itself. When written in trust, the payout does not form part of your estate and can provide liquidity at a crucial time.Charitable Giving
Leaving 10% or more of your estate to charity can reduce the IHT rate on the rest from 40% to 36%. Charitable gifts made in your lifetime can also reduce the value of your estate.Pension Planning
Pensions typically fall outside your estate and are not liable for IHT (though this is changing). A wealth manager can help structure your withdrawals and contributions in the most tax-efficient way.Asset Structuring and Rebalancing
A skilled adviser can help you:- Shift assets into more tax-efficient structures
- Transfer assets to your spouse or children in the right way
- Use investment vehicles that qualify for Business Relief (like AIM shares)
Why act now?
With thresholds frozen and changes coming soon, the time to act is now. Delaying IHT planning could cost your heirs hundreds of thousands of pounds.
How to Find the Right Help
Choosing a wealth manager is a critical step in protecting your legacy. At findawealthmanager.com, we connect you with the UK’s most experienced IHT and estate planning specialists.
Benefits of using Find a Wealth Manager:
- Quick, free and confidential matching service
- Compare vetted wealth management firms
- Access to experts in IHT, pensions, and trusts
Next Steps
Answer a few simple questions about your goals and circumstances
Get matched with trusted wealth managers based on your needs
Start planning with confidence
and take control of your financial legacy!
Final Thought
Inheritance Tax doesn’t have to be a burden. With the right advice, it’s possible to pass on your wealth as intended—efficiently, responsibly, and with minimal tax. Don’t leave it too late. Start planning today.
