Estate Planning

Many people believe that inheritance tax only affects wealthy families, however, rising property prices have meant more of us are paying inheritance tax. Whilst inheritance tax is a tax on your wealth that is paid after your death, there are often ways of reducing the liability.

Financial planning strategies exist that can help to reduce your tax liability and we will be able to help you explore your options.

Inheritance Tax Allowances (2025/26)

Nil-Rate Band (NRB):

Every individual has a £325,000 nil-rate band. This threshold has been frozen since 2009 and is confirmed to remain in place until at least 2030.

Married Couples & Civil Partners:

If you are married or in a civil partnership, any unused NRB from the first death can be transferred to the survivor’s estate. This means a couple can currently pass on up to £650,000 free of IHT.

Tax Rate:

IHT is charged at 40% on the value of an estate above the available thresholds. This can be reduced to 36% if at least 10% of the net estate is left to charity.

Residence Nil-Rate Band (RNRB):

An additional allowance of £175,000 per person applies when a main residence is left to a direct descendant (children, stepchildren, adopted or foster children, or grandchildren).

1. For married couples or civil partners, unused RNRB can also be transferred, giving a combined potential RNRB of £350,000.

2. When combined with the standard NRB, a couple can currently pass on up to £1 million free of IHT if they meet the qualifying conditions.

Tapering for Large Estates:

The RNRB is reduced by £1 for every £2 that the estate exceeds £2 million. This means estates worth £2.35 million or more will lose the RNRB entirely.

Who Cannot Benefit from the RNRB:

1. Estates with no qualifying direct descendants.

2. Estates exceeding the taper threshold where the RNRB is fully eroded.