"People often assume that inheritance tax only applies to the very rich, but with rising house prices this isn’t the case. If your estate is above £325,000, you could be liable for this tax." - Emma Pritchard, Senior Advice Technician

What is inheritance tax (IHT)?

Inheritance tax is a tax payable on your estate when you die. Your estate can include your home, jewellery, savings and investments, cars and even works of art. IHT planning is all about passing on your estate exactly as you intended – whether that’s to a loved one or a charity - without HMRC taking too much.

IHT - the basics

  • A tax rate of 40% applies if your estate exceeds the nil-rate band, which is fixed at £325,000 until 2021. Anything below this can be passed on tax free.
  • Anything left to your spouse or civil partner, is free from IHT – even if the value exceeds the nil-rate band. But if you’re cohabiting, even if you have children together, IHT will apply – an adviser can help explain this further.
  • If you’re a homeowner, the residence nil-rate band can add £125,000 (2018/19) to your existing nil-rate band, increasing your IHT-free allowance to £450,000 (2018/19).

How much inheritance tax will I have to pay?

This depends on the size of your estate. For example, if your total estate is worth £400,000, the nil-rate threshold will protect the first £325,000 from inheritance tax, but you will pay IHT at 40% on the remaining £75,000 – which is around £30,000 to the taxman – who collected more than £5 billion in revenue (2017/18). But this is a simplified view – our advisers can help assess your IHT liability based on your circumstances.


Ways we can help reduce your inheritance tax bill

Our experienced, independent financial advisers can help you with inheritance tax planning. They will:

  • Calculate your IHT liability so you know what you could owe
  • Assess investments, life assurance, gifting and other options to help reduce or fund your IHT bill
  • Review your pensions and look at how they can help with IHT planning
  • Create your bespoke IHT plan with our technical experts

Arrange a free consultation now

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