Inheritance Tax Planning Solicitors

The standard death rate is 40% on the chargeable amount after the applicable bands, exemptions and reliefs. The ordinary nil-rate band is £325,000; earlier chargeable gifts can affect how much remains available. Reporting may still be required when no tax is payable.

A residence nil-rate band of up to £175,000 may apply where a qualifying home passes to direct descendants and the conditions are met. It is tapered by £1 for every £2 by which the relevant estate value exceeds £2 million. It is not an automatic extra allowance for every homeowner.

Unused percentages of relevant bands can potentially transfer between spouses or civil partners, subject to the rules and claims. Do not assume every couple has a £1 million tax-free estate.

• Inheritance Tax overview
• Residence nil-rate band conditions

Transfers between spouses or civil partners and gifts to qualifying charities can be exempt, but the spouse exemption has qualifications where long-term UK residence differs. An unmarried partner does not receive the spouse exemption simply through living together.

The annual gift exemption is £3,000 in total, with unused exemption carried forward for one tax year. Other exemptions have their own conditions. Normal expenditure out of income requires a normal pattern, payments from income and enough income remaining to maintain the donor's usual living standard. Keep records supporting the claimed treatment.

• Spouse and civil-partner exemption
• Normal expenditure out of income

An outright gift to an individual may be a potentially exempt transfer: survival for seven years can remove that gift from charge, subject to the applicable rules. Taper relief reduces tax on a qualifying chargeable gift after three years; it does not simply reduce the value of every gift or restore the nil-rate band.

If the donor continues to benefit from property given away, gift-with-reservation rules may keep it within the taxable estate. A transfer into trust has a different tax framework. Check ownership, the benefit retained, previous transfers and other taxes before proceeding.

• Gifts, exemptions and retained benefits
• Trusts

From 6 April 2025, long-term UK residence replaced domicile-based tests for the relevant Inheritance Tax scope rules. Broadly, residence in at least 10 of the previous 20 tax years can bring overseas assets within scope.

Leaving the UK does not necessarily end that exposure immediately: a residence tail can continue for up to 10 tax years, with shorter periods and transitional exceptions in relevant cases. Trust property and older arrangements need separate analysis. Nationality or a current overseas address is not a sufficient test.

• Long-term residence and transitional guidance
• Finance Act 2025 residence changes

From 6 April 2026, qualifying property eligible for 100% Agricultural or Business Relief is subject to a combined £2.5 million allowance for an individual. Qualifying value above the available allowance generally receives 50% relief. Unused allowance from a deceased spouse or civil partner may be transferable; previous qualifying transfers can reduce what is available.

These are reliefs for qualifying property, not general exemptions for every farm or company. Agricultural value, occupation and ownership conditions matter; the usual periods are two years for qualifying owner occupation or seven years where occupied by someone else, with exceptions to examine.

Business Relief generally requires a two-year ownership period, subject to applicable exceptions, and excludes businesses mainly dealing in investments. Some categories receive only 50% relief, including qualifying AIM-type traded shares under the current rules.

Transitional treatment can affect gifts made from 30 October 2024 where death occurs on or after 6 April 2026 within seven years. Trust allowances have separate allocation rules: do not assume each new trust creates a fresh personal allowance.

• HMRC: combined relief allowance
• Agricultural Relief conditions
• Business Relief conditions
• Finance Act 2026 relief and transition provisions

Settling property is not a universal route out of Inheritance Tax. Depending on the trust, entry, ten-year and exit charges or treatment within a beneficiary's estate may apply. Retained benefits and residence can alter the analysis.

Identify the trust type, creation and transfer dates, settlor and beneficiary interests before calculating tax. Registration and other tax reporting can be required separately, even where no immediate Inheritance Tax is due.

• Trust taxation
• Trust duties and registration

As at 12 October 2026, the new pension estate-inclusion rules are not yet operative. Existing treatment depends on the benefit and arrangement; it is unsafe to say all pensions are outside Inheritance Tax.

Finance Act 2026 provides for most unused pension funds and pension death benefits to enter the Inheritance Tax estate for deaths on or after 6 April 2027. Earlier deaths remain under the earlier rules even if payment occurs later. Excluded benefits include qualifying death-in-service benefits and dependants' scheme pensions; the precise statutory conditions matter.

Review scheme information and nominations alongside the estate plan, but do not make pension withdrawals or transfers solely on the basis of this summary. Financial-product advice and the developing administrative guidance need separate consideration.

• HMRC pension reform technical note
• Pension reform commencement

Compile valuations, ownership records, liabilities, gift dates and values, residence history, previous spouse or civil-partner estate information and any trust or business documents. Relief claims need evidence, not just a description of an asset as agricultural or business property.

Compare legal options with your own future needs and the consequences for beneficiaries. Agree the scope of legal and tax work, coordinate with appropriately authorised financial advisers where needed, and review the plan when circumstances or law change.

• Coordinated estate planning
• Will writing
• Probate
• Estate administration