When you die, funds from your estate are used to pay inheritance tax (IHT) to HM Revenue and Customs (HMRC). Many people put off inheritance tax advice as they believe the only way to mitigate it is to pay for an expensive insurance policy, but this is a common misunderstanding. Arrange a meeting with one of our advisors today to assess if you will be liable to pay any tax on your estate and to find out the best way for this to be mitigated.

With Pension plans now being included in your estate for Inheritance Tax purposes from 2027, many people are now falling into this category who were not before.

There’s normally no inheritance tax to pay if either:

• the value of your estate is below the current £325,000 threshold; or
• you leave everything above the £325,000 threshold to your spouse, civil partner, a charity or a community amateur sports club.

If you give away your home to your children (including adopted, fostered or stepchildren) or grandchildren, your threshold can increase to £500,000.

If you’re married or in a civil partnership and your estate is worth less than your threshold, any unused threshold can be added to your partner’s threshold when you die. This means their threshold can be as much as £1 million.

How much is inheritance tax?

Currently the standard IHT rate is 40%. It is charged on the part of your estate that’s above the threshold.

Example: Your estate is worth £500,000 and your tax-free threshold is £325,000. The inheritance tax charged will be 40% of £175,000 (£500,000 minus £325,000).