Inheritance tax
November 18, 2021

Inheritance tax planning – no longer just for the rich

Inheritance tax planning might once have been regarded as something that only very wealthy people needed to consider, but with rising property prices and a freeze on the Nil Rate Band and Residence Nil Rate Band, has the emphasis shifted?

In my view, the simple answer to this question is, yes, most definitely. Increasingly, inheritance tax planning is something that we all need to think about.

It should be a wake-up call to us all that between April and July this year HM Revenue & Customs’ (HMRC) inheritance tax (IHT) collections were £500m higher than the same period 2020.

In the Spring Budget it was revealed that the Nil Rate Band and Residence Nil Rate Band would be frozen until at least April 2026. When you place this against a background of soaring property prices, the inevitable result will be exposure to IHT for many more families.

The Nil Rate Band currently stands at £325,000. IHT at 40% applies to anything above this. The Residence Nil Rate Band may also apply, which is an additional tax-free allowance of up to £175,000.

For an increasing number of families these allowances will barely cover the value of their homes, even before savings and other assets are taken into account.

I would caution against complacency when it comes to IHT. I have seen occasions when it has been necessary for a family home to be sold to enable people to pay their IHT bill.

My advice would be to start planning as soon as possible to ensure you are making the most of the available allowances and have structured your assets in such a way that your exposure to IHT is eliminated or significantly reduced.

Planning ahead enables you to take advantage of more options such as gifting money or leaving money to charity (something which can reduce the IHT rate that you pay).

Acting early and seeking specialist advice is the key. To speak to any member of the Private Wealth Team about IHT planning, please call 0161 929 8494 or email