You have worked for most of your life and paid your taxes, so it seems all too unfair to be taxed again when you die, however, simply by taking professional advice and planning ahead, there are ways to mitigate your potential inheritance tax bill.

As financial advisers we are often asked about inheritance tax, “how much it will cost?”, “how can I potentially lower my tax bill?”, “is there a way of not paying inheritance tax?” One major consideration will be the terms of your will and to whom you will be leaving your estate.

The current inheritance tax (IHT) nil rate band (or threshold) is £325,000 per person (frozen until 2020/21). The threshold will be higher if you leave your home to your direct descendants for example your children or grandchildren. This is due to a new residential nil-rate band, designed to help reduce the burden of IHT by making it easier to pass on the family home without a tax charge. The value of this additional nil-rate band is being phased in and is currently £125,000 for 2018/19 and is set to rise to £175,000 by 2020/21. To put the inheritance tax (IHT) bill into perspective, if your estate is worth £600,000, tax will be charged on £275,000 (the amount above the £325,000 limit); therefore, the amount to be handed over to HMRC is 40% of the excess over the nil rate band which would be £110,000.

There are a number of ways to minimise the amount of Inheritance tax your executors will have to pay and to protect the value of your estate.

– Leaving money to charity. – Making gift payments. – Using your annual exemptions. – Putting assets in trust. – Taking out life insurance in trust to cover any potential IHT liability. If you would like more information about Inheritance tax planning or would like help to minimise your potential liability, then it pays to seek professional advice.

There will be fees payable for this advice, with the amount normally dependant on the complexity of your situation, however, in most cases, the tax savings will far outweigh the cost of the advice and will be time and money well spent.



This article aims to supply general information but it is not intended to constitute advice.  Every effort is made to ensure that the law referred to is correct at the date of publication and to avoid any statement which may mislead.  However, no duty of care is assumed to any person and no liability is accepted for any omission or inaccuracy.  Always seek specific advice.