Expert financial advice:

Inheritance Planning

When you die, your assets are subject to inheritance tax (IHT). In the UK, estates are subject to 40% tax over a threshold of £325,000. Many people who will be massively affected get Inheritance Planning, which means they get personalised guidance on how to make the most of their assets and ensure that their money goes towards the beneficiaries they want, instead of the tax man.

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How does Inheritance Tax work?

After you die, the Government assesses how much your estate is worth, and deducts any outstanding debts. Your assets include any cash you have in the bank, your investments, any property or business you own, vehicles and payouts from life insurance policies.

So how much tax do you actually pay? The easy answer is 40% over the threshold of £325,000/ The accurate answer is much more complicated. Thanks to the nil band residence rate, up to £175,000 of your property value can be protected. Also, if you’re married then the surviving spouse can have both the deceased wife/husband’s plus their own threshold allowance, meaning that they can pass up to £1 million to their children tax-free.

Inheritance planning is basically getting advice on how to make the most out of your assets. This isn’t just for the elderly. The younger you think about this, the more prepared you will be. In order to start being smart with your money, getting professional advice is the best thing you can do.

So will I have to pay inheritance tax?

The first thing to think about is whether you will actually have enough assets to be affected by inheritance tax. £325,000 seems like a lot, but if you leave property then this can take up a significant portion. The current tax rate over the threshold is 40% which means a large chunk will be taken away. Remember - these percentages and thresholds can change in the future if the government decides to amend them.

There are a few groups of people who are completely exempt from paying inheritance tax. One is people in ‘risky’ job roles, who don’t don’t pay any inheritance tax if they die in active service. These roles include armed forces personnel, firefighters, police, paramedics, and humanitarian aid workers. This exemption also happens if someone is injured and later dies due to their injury, even if they’re no longer on active service.


Make the most out of your money.

For the "wealthy"?

Though the threshold to start paying inheritance tax can seem high, this can be eaten up by the property you own. Particularly due to rising house prices, more and more people are being affected by Inheritance Tax and should be thinking about planning.

Annual allowances

Inheritance Tax Planning can give advice on how to take advantage of what the system allows. For example, you can give up to £3,000 a year, as well as any number of small gifts of up to £250 each, which you don’t have to pay inheritance tax on.

Wedding gifts

There’s no need to pay Inheritance Tax on wedding or civil partnership gifts to your child up to £5,000, or £2500 for your grandchild or great-grandchild.

7 year rule

You are free to give away bigger financial sums that will avoid inheritance tax altogether, as long as you live for at least seven years from the date of giving the gift.

Family Home Allowance

A nil rate band has been added to the existing thresholds which means that by April 2020 it will be worth £175,000. This extra allowance is transferred to your spouse when you die, which means that a married couple can potentially leave an estate of up to 1m without incurring any inheritance tax. To be eligible, the money must be left to a direct descendant.


If you give 10% of your estate to charity, then the tax rate goes down to 36%.

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Everything you need to know about inheritance planning.

Inheritance Tax is paid by the executors of a will, though ultimately it simply reduces the value of the estate that is passed onto to the beneficiaries of the will.

You should pay your tax 6 months after the death of the person.

Inheritance tax is assessed when the executors of an estate apply for probate or administrators apply for Letters of Administration.

Probate just means the legal right to distribute the estate after death.

Residence nil rate band is the value of an estate which is not subject to inheritance tax. This is currently £125,000 (2018-2019) but by 2020 will be increased to £175,000. This means that a couple could end up leaving their children feasibly up to £1million in assets.

There is a false perception that only the wealthy are affected by Inheritance tax. However, rising house prices mean that many other people are also affected. Also, the new £1million threshold only applies to married couples, so single or divorced people only need to have over £500,000 in assets to be affected.

No! The tax is only paid to children or other beneficiaries.

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