We are often asked by clients how they can mitigate inheritance tax. This is an important part of Wills and estate planning.
Inheritance tax is a tax paid on the value of your estate. How much tax you pay will depend on the value of your assets and any liabilities or debts at the date of your death.
Everyone has an inheritance tax allowance (called the Nil Rate Band Allowance) which is the total amount you can leave on your estate tax free. This is currently (January 2025) £325,000. Anything you leave in excess of this is currently taxed at 40%.
There are additional allowances which can reduce your inheritance tax liability. Some of these include the following:
- Transferable Nil Rate Band Allowance – the amount you can transfer for a spouse or civil partner who has died first
- Residence Nil Rate Band Allowance – an additional allowance which is currently £175,000 and is available if you leave your main home (or net proceeds of sale of main home) to direct decedents (ie children, grandchildren)
- Transferable Residence Nil Rate Band Allowance – the additional Residence Nil Rate Band Allowance which you can transfer for a spouse or civil partner who has died first
There are the following exemptions and reliefs which can also apply to further reduce your inheritance tax liability:
- Spouse Exemption
- Charity Exemption
- Agricultural Property Relief
- Business Property Relief
We offer fixed fees for providing inheritance tax advice as part of the Will reviews or separately. We also offer a fixed fee for reviewing and advising in respect of an inheritance tax account (IHT400) if you have prepared this yourself as part of an estate administration.
