Inheritance planning

If your estate (house, belongings, savings, pension) is over £325,000 your beneficiaries may need to pay inheritance tax (IHT). There are many ways to be more tax efficient and avoid paying 40% inheritance tax. If you do need to pay IHT you have 6 months after probate to pay, if you need to sell items to raise the tax amount you can request an extension.

Inheritance planning steps


Make a will

A will can reduce your tax burden on others; giving to charity can reduce the amount to 36% tax and leaving your house to your children gives you a higher threshold and if you are married with children only £270,000 of your assets will be transferred over to you, not making the most of the IHT threshold. Why do a will.


Leaving your house to children or grand children in your will

When your children or grand children are beneficiaries of your primary residence your tax allowance increases to £500,000. This is transferable if one parent dies and leaves the house to their married partner meaning a married/civil partnership couple could leave up to £1million tax free.


Marry your partner or form a civil partnership

If you are in a committed relationship (mistakenly called common law) but not married or in a civil partnership you will be liable for tax over £325,000 of your partners assets.


Give gifts

You can give up to £3000 in gifts a year and £5000 for a child's wedding without it being considered as part of your estate. Any gift over this threshold your beneficiaries will need to pay tax if you die within the 7 years.


Placing assets in a trust

If you have a very large and or complex estate one option is to put assets into trust. A misconception is there is no tax to pay, there is tax to pay on entry into a trust and every 10 years, this is a complex area and you should get professional advice on how best to execute this.

In this guide

Jargon buster

Main residence nil-rate band

The tax band set at £175,000 for each person if you leave your main property to a child or grandchild. This is addition to the basic IHT of £325,000.


Inheritance tax


When a person dies without having a will.


Applying for the legal right to deal with someone's property, money and possessions (their 'estate') when they die is called 'applying for probate'.

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Tools & Resources

Inheritance tax planning guide

Hargreves & Landsdowne IHT guide

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Understanding who inherits without a will

Government tool to understand who will inherit

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