Inheritance Tax (IHT) is often viewed as a distant concern, something to be addressed later or left to the next generation to sort through. Yet for many high-net-worth individuals, especially those with significant property wealth or evolving family structures, the most effective planning window is not in the final years of life, but in the decades prior.
As the value of estates rises and thresholds remain largely static, more families than ever are entering the IHT net, often without realising it. The result can be a substantial erosion of generational wealth and a legacy defined by administrative complexity and preventable cost.
Below, we outline ten signs that it may be time to revisit your IHT position, ideally with your financial, legal, and tax advisers working in concert. It is not about urgency. It’s about foresight.
For many, the family home is both a place of sentiment and a primary driver of estate growth. Yet even modest-seeming appreciation over time can tip your estate over the IHT threshold.
With the residence nil-rate band currently capped at £175,000 (and subject to conditions), rising property values may have quietly created exposure, particularly if your estate now exceeds £1 million jointly.
A Will is a living document. If it hasn’t been reviewed in half a decade or more, it’s likely out of step with current legislation, asset valuations, or family dynamics. Revisiting your Will offers an opportunity to reframe bequests, explore trust-based distributions, and ensure that IHT planning aligns with your actual estate structure.
Ad-hoc financial support to children or grandchildren, a deposit here, a school fee there, may be well-intentioned, but without documentation or a timing strategy, it can lead to confusion or unintended IHT consequences. Structured gifting, particularly from surplus income or through trusts, can reduce exposure significantly when coordinated properly.
Note: We do not provide tax advice. Any gifting strategy should be reviewed in consultation with a qualified tax adviser.
Business relief can offer valuable IHT exemptions, but eligibility is not automatic. If you’ve sold or restructured shares, invested in a new venture, or moved from a trading business to investment holdings, your IHT position may have shifted materially.
Downsizing or relocating often reflects a shift in lifestyle priorities. But the capital released from property sales, if left unstructured, can increase your estate’s taxable value. Without timely action, what appears to be simplification can result in greater exposure.
A life assurance policy intended to support your family could inadvertently enlarge your estate and increase the IHT bill it was meant to ease. If the policy is not held in trust, the payout may be subject to tax. A simple restructure can preserve its intended purpose.
Second marriages, blended families, estranged relationships, or vulnerable beneficiaries all add nuance to estate planning. Without careful structuring, assets may not pass as intended, and tax liabilities may arise in unexpected places. Trusts and Letters of Wishes are vital tools in these scenarios.
Funding education can be a powerful way to transfer wealth, but without proper planning, large or recurring payments may count against your estate. If structured under the regular gifting from income exemption, these contributions could fall outside IHT entirely. If not, they may simply inflate future liability.
Pensions often fall outside of the estate for IHT purposes, but only if correctly nominated. A lapse in nominations, or a lack of alignment between your Will and pension provider, can lead to lost opportunities. A strategic review can ensure that your pension becomes an effective IHT tool.
If you have or are considering gifting property to children or grandchildren, this could increase your future liability if not structured correctly. A review can ensure the transfer is tax efficient either in future or retrospectively to already made transfers.
If you’ve experienced this first-hand, consider how your own arrangements might be perceived, or handled, by those you leave behind.
IHT is not just a technical issue. It is a question of intent. The more deliberately you shape your estate during life, the more control, clarity, and benefit you can pass on, without burden.
At Henry Dannell, we work alongside your legal and tax advisers to help structure estates with foresight, aligning protection, liquidity, and legacy into a plan that honours your ambitions while mitigating future liabilities.
If you would value a discreet review of your estate and its exposure to IHT, our advisers are here to support that conversation, with strategy.