Inheritance Tax Planning

What is inheritance tax planning?

You’ve probably heard the team ‘Inheritance Tax’ or ‘IHT’ mentioned in passing or in the news. Essentially it’s a tax that may be payable on your estate when you pass away, including things like your property, money, savings, investments and possessions.

This means if the value of everything you own is below the thresholds, there’s usually no IHT to pay. But if your estate is worth more, your loved ones could face a bill, so having a plan in place can make a real difference.
Currently, anything over the threshold of £325,000 per individual may be taxed at 40%, which can have a big impact on how much of your estate is passed on to your loved ones.

Inheritance tax planning is simply about putting sensible steps in place now to reduce what could be owed later.

Understanding the basics

Inheritance Tax (IHT) is something many people don’t really think about until they absolutely have to, often during a difficult or emotional time. But having a basic understanding now can make a big difference later, especially if you’re looking to pass on property, savings or other assets to loved ones.

So here’s a quick overview to give you a feel for how it works:

• Standard taxfree allowance: Everyone has a basic threshold (known as the nilrate band), which is £325,000 in the UK. Above this amount, IHT is typically charged at 40% on the excess.
• Home allowance: If you leave your home to children or grandchildren, an additional residence nilrate band may apply, which can increase the amount that’s taxfree.
• Gifts before death: If you give away money, property or assets while you’re still alive, they may still be counted as part of your estate for IHT if you pass away within seven years. It’s worth noting that there’s also a tapering system, though, so the tax rate does gradually reduce over time.
• Small exemptions: You can give away up to £3,000 each tax year without it being added to your estate for IHT purposes. There are also allowances for wedding gifts (up to £5,000 depending on your relationship to the person), small gifts under £250, and regular gifts out of surplus income.
• Debts and liabilities: The value of your estate for IHT is based on what’s left after any outstanding debts are settled. This includes things like mortgages, credit cards, household bills and (in most cases) funeral expenses – all of which can help reduce the taxable value.
• Spouse or civil partner exemptions: Anything you leave to your spouse or civil partner is usually exempt from IHT. Plus, any unused tax-free allowance from them can often be passed on, effectively doubling your combined threshold.
• Charitable gifts: Leaving 10% or more of your estate to charity can reduce the IHT rate on the rest of your taxable estate from 40% to 36%. It’s a small detail that can make a big difference.

We get it…on paper, all this talk of thresholds, bands and allowances can sound like a load of jargon. And to be honest, you’re not alone if it makes your head spin a little. But understanding the basics can make a big difference, especially when it comes to protecting what you leave behind.

That being said, we always recommend speaking to a professional rather than trying to decode it all yourself.

After all, if your house had an electrical issue and you had no idea where to start, you wouldn’t just grab a screwdriver and hope for the best – you’d call in someone who knows what they’re doing, and your financial future deserves the same care.

*Inheritance Tax Planning, Estate Planning and Trusts are not regulated by the Financial Conduct Authority.*

How we can help

At Tipping & Webb, we understand this is a sensitive subject, after all,  it’s about your life, your family, and the legacy you want to leave. That’s why we handle every conversation with empathy, understanding, and zero judgment. We talk to you like a human being, not a spreadsheet, and we’ll always explain things in a way that feels approachable and easy to digest.

Our Financial Adviser, Doug, will take the time to get a full picture of your finances, including your assets, your wishes, and any plans you may have for gifting or passing wealth on. From there, he’ll talk you through what inheritance tax could mean for your estate, and how you might be able to reduce the potential liability in a way that feels both sensible and secure.

This could include using gifting allowances, setting up trusts, or adjusting how certain assets are held or invested. There’s no one-size-fits-all approach, so we’ll never suggest anything that doesn’t make sense for your life.

Of course, if you wish, we’re always happy to involve your family in the conversation too, so that everyone is informed, included, and able to plan together.

Our advice is always clear, thoughtful, and tailored to you – because it’s not just about money, it’s about the legacy you want to leave behind and the people you care about the most.