By Renata Upperton

Solicitor

10 September 2026

Article Blog

In my role as a private client solicitor, I often meet with wealthy clients who have complex family structures.

Most clients who come to see me to discuss the preparation of their Wills are concerned about IHT and want to know whether there is anything they can do to try to reduce the IHT liability on   their death so that their chosen beneficiaries inherit as much as possible.

Under current legislation, the first £325,000 of an individual’s estate passes free of IHT.  This tax-free amount is also known as the Nil Rate Band (‘NRB’).  Anything in excess of that amount may be subject to IHT at the rate of 40%, subject to any applicable reliefs and exemptions. 

As things stand at the moment, a married couple or civil partners can pass on up to £1 million without any IHT liability at all, provided the relevant NRBs and Residence Nil Rate Bands are available and all applicable conditions are satisfied. The Residence Nil Rate Band is an additional allowance which may be available where a qualifying residence passes to direct descendants. It is subject to various conditions and may be tapered for larger estates.

According to the latest government data, around 4.7% of all estates (or fewer than 1 in 20) suffer  IHT in the UK. However, the inclusion of most unused pension funds and pension death benefits within the scope of IHT from 6 April 2027 is expected to result in more estates becoming liable to IHT, and in higher IHT liabilities for many estates.

I would like to share with you a few ideas that I invite my clients to consider when we discuss IHT.

Gifts to spouses/civil partners and gifts to charities

Gifts to spouses or civil partners and gifts to charities pass free of Inheritance tax, regardless of their value or whether they were made during one’s lifetime or on death (in a Will).  If you are in an informal relationship, then the best thing that you can do from an IHT planning perspective is to get married or enter into a civil partnership.

 If you like supporting local charities and the value of your estate is such that there will be IHT to pay on your death, you could think about gifting part of your estate to your chosen charities in your Will.  If, on your death, at least 10% of your estate passes to qualifying charities, your estate will be subject to IHT at a reduced rate of 36% on the relevant portion of the estate. This can, in some circumstances, result in more money being available for the other beneficiaries named in the Will, as well as benefiting the charities you choose to support.

Small gifts and the annual exemption

You   can make as many gifts of up to £250 as you wish in each tax year, provided that they are all to separate individuals. 

If you make a gift of more than £250 to an individual, the small gifts exemption will not apply to that gift. However, the gift may be covered by your annual IHT exemption, which allows you to give away up to £3,000 in each tax year without any IHT implications. If you do not use all of your annual exemption in one tax year, you can normally carry forward any unused amount to the following tax year.

Gifts out of surplus income

If you can show that your usual income is more than you need to maintain your standard of living, you could make regular gifts out of surplus income. Such gifts can be exempt from IHT, regardless as to the amount, provided the conditions for the exemption are satisfied.

The seven year rule

If you make an outright gift during your lifetime, that is not covered by one of the exemptions already discussed, it will generally be treated as a ‘potentially exempt transfer’ (PET). This means that the gift will become completely exempt from IHT if you survive for seven years from the date of the gift.

If you die within seven years of making the gift, the value of the gift will generally be taken into account when calculating the IHT due on your estate. The gift may therefore use some or all of your available NRB when calculating the IHT due on your death, depending on its value and the other gifts you have made during the relevant period.

If you survive for more than three years but less than seven years after making the gift, ‘taper relief’ may reduce the amount of IHT payable on the gift, provided the relevant conditions are met. The longer you survive the gift, therefore, the greater the potential IHT benefit.

Will drafting

A carefully drafted professional Will is essential to achieve the most favourable IHT outcome for you and your family.

If you would like to seek estate planning advice tailored to your personal and family circumstances, your history of gifting, your wealth and recent and future inheritances then our highly experienced and knowledgeable Private Client Team will be very happy to assist. Please contact us here: Contact | Taylor Walton Solicitors

Disclaimer: General Information Provided Only

Please note that the contents of this article are intended solely for general information purposes and should not be considered as legal advice. We cannot be held responsible for any loss resulting from actions or inactions taken based on this article.