Inheritance Tax (IHT) can feel like a complex and sometimes overwhelming topic, but it doesn’t have to be. Millions of homeowners are potentially liable every year. For example, HMRC reports that in the 2024–25 tax year, IHT receipts totalled £8.2 billion.

I work with clients to help them plan effectively, so their wealth passes on as they intend while minimising unnecessary tax. Here are some key steps I guide clients through to make the most of their legacy.

1. Make a Plan

The first step is thinking about where you want your money to go and why. Many people worry about giving assets away too early or about potential issues with children’s spouses.

I help you add up the value of your savings, investments, property, and personal possessions — don’t forget ISAs, which are tax-free while you’re alive but count towards your estate for IHT. After deducting any debts, we can see whether IHT might be an issue.

Currently, the nil rate band is £325,000 per person, with an additional residence nil rate band available when leaving a home to children or grandchildren. If your estate exceeds these thresholds, IHT may apply.

2. Write a Will

A clear, up-to-date Will ensures your wishes are followed and can help reduce IHT. Many couples use Wills to place part of their wealth into a trust, allowing the surviving spouse to benefit while still protecting other family members, such as children or grandchildren. This helps make full use of IHT allowances on death.

3. Minimise Your Estate

You can’t be taxed on money that’s no longer part of your estate. Life insurance policies, employer death benefits, and legacies can often be placed in trust, ensuring they pass to the people you choose and are outside your estate for IHT purposes.

4. Marriage Matters

Transfers between spouses (or civil partners) are generally free from IHT. But unmarried couples don’t get the same advantage, which can create unexpected tax bills if you co-own a property.

5. Think About Your Home

For many, their home is both their biggest asset and their biggest IHT concern. While the Government has closed loopholes around giving away property while living in it, there are still ways to reduce IHT. Joint tenancy and tenancy in common arrangements, for example, affect how property passes on death and can impact IHT liability.

6. Investments

Some investments get favourable treatment for IHT, such as:

• Shares in unquoted businesses (Business Property Relief – BPR)
• Woodlands, farms, and farmland
• Certain AIM-listed shares

These can be part of a wider strategy to reduce IHT while still growing your wealth.

7. Explore Trusts

Trusts are a powerful tool for estate planning. They allow you to provide for loved ones while keeping assets outside your estate. With the right advice, you can even retain an income from assets you place in trust.

8. Pay Tax in Installments

Whole-of-life insurance written under trust can be used to cover IHT liabilities, helping ensure your heirs aren’t faced with a large tax bill. Premiums are considered gifts from income, so you can build this fund without reducing your lifestyle or savings.

9. Enjoy Your Money

It’s important to remember: this is your wealth. Planning for IHT shouldn’t stop you enjoying life. Spending wisely and giving thoughtfully during your lifetime can reduce future IHT liability.

10. Use Annual Allowances

Small, regular gifts from your normal income can be exempt from IHT, as long as they don’t materially affect your standard of living. Annual exemptions and wedding gifts also reduce the estate and can pass wealth to loved ones tax-efficiently.

I help clients navigate these steps, tailoring strategies to their unique situation and ensuring their estate planning works in harmony with their wider financial goals.

Inheritance Tax Planning, Estate Planning, Trust Planning, and Will Writing are not regulated by the Financial Conduct Authority.

Business Property Relief (BPR) involves investments that are higher risk and can be difficult to sell.