Inheritance Tax Planning

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So what exactly is Inheritance Tax or IHT

It has rather humorously been described as a voluntary tax, due mainly to the fact that there are many ways to mitigate it that quite a lot of people make no efforts to do. The inland revenue raise in excess of £2,000,000,000 per annum yes that was £2 billion.

The tax is essentially potentially due on monies past onto beneficiaries other than the spouse.

It is little known that there are two levels at the moment people think there is only one but there is not there are indeed two. The first one is £0 to £325,000 (rates for tax year 2016-2017) this is currently zero rated and known as the Nil Rate Band (NRB). It is known as the NRB, because whilst extremely unlikely the government is always able to raise this level from zero to actually generate revenue.

The next level is over £325,000 and this level and beyond is taxed at 40%. So any money over and above £325,000 is potentially taxable at a rate of 40%.

You will here talk throughout this site of the word potentially, it is important to understand that IHT is always potential, potentially it is due and potentially it may not be due. With careful planning the potential can be reduced, in quite a lot of cases, down to nothing.

It is important to be aware that spouses can now preserve their NRB after death if they pass their estate to their surviving spouse. This means on the death of the second spouse there is a potential £650,000 of NRB available within the estate.

So to summarise inheritance tax is a tax on your estate when it is passed onto your beneficiaries. It is taxed at a rate of 40% on any amount over £325,000. So an example of a total estate passed onto beneficiaries worth £425,000 with a single allowance would attract a tax of £40,000.

IHT Calculator

Use our FREE tool to estimate the inheritance tax liability be due on your estate.

Glossary of Terms

Baffled by all the jargon? Then why not use our glossary to make things easier!


This section covers the various gifts available to you to utilise the tax free benefits open to you.


Here you will find all the exemptions which may enable you to pass on parts of your estate free of any inheritance tax.

The 7 Year Rule

Gift any part of your estate outside those allowable will create a potentially exempt transfer find out how you stand under the tax laws.

IHT relief's

There are certain relief's that like the exemptions allow for transfer to people without tax this section covers those.