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Inheritance Tax · Trusts · Business Relief · Gifting

Estate & Inheritance
Tax Planning

Thoughtful, long-term planning to protect your estate and reduce the inheritance tax burden on everything you've worked to build — so more passes to the people and causes you care about.

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Estate and IHT planning consultation — DKAT Accountants
40%
IHT rate above the nil-rate band
£1m
Combined nil-rate band available to married couples
7 years
How far back HMRC can look at gifts in some cases
£0
IHT paid by thousands of estates with proper planning
Overview

Inheritance tax can be significantly reduced with the right planning

With careful planning, many estates can significantly reduce their IHT liability. The reliefs, exemptions and planning strategies available under current UK law mean that some estates pay far less than the 40% headline rate, and in certain circumstances pay none at all — though this depends on individual circumstances and cannot be guaranteed.

The challenge is that IHT planning requires time. The most effective strategies — such as gifting assets out of your estate, establishing trusts, or restructuring business interests — need to be put in place years before they are needed. Waiting until a serious illness or old age significantly restricts your options.

At DKAT, we help individuals and families understand their current IHT exposure, explore the full range of strategies available to them, and build a multi-year plan that reduces their estate's tax liability progressively — without requiring them to give up financial security or control. We work in close collaboration with solicitors and financial advisors to ensure every element of your plan is properly documented and legally robust.

Key IHT thresholds and rates

  • Nil-rate band: £325,000 per person (subject to government review)
  • Residence nil-rate band: up to £175,000 for qualifying homes
  • Combined couple's threshold: up to £1,000,000
  • IHT rate: 40% above the threshold (36% with 10% charitable gift)
  • Annual gift exemption: £3,000 per tax year
  • Business/Agricultural Property Relief: 50% or 100% on qualifying assets
£1m
Available nil-rate for couples
40%→0%
With full planning
Who Should Consider IHT Planning

IHT affects more estates than most people expect

🏠
Property Owners
Rising property values mean many people who don't consider themselves wealthy have estates above the nil-rate band. A £500,000 house plus modest savings can easily trigger an IHT liability.
💼
Business Owners
Business Property Relief can eliminate IHT on qualifying business assets — but it requires careful structuring and documentation. We identify and protect these reliefs.
👨‍👩‍👧
Married Couples & Civil Partners
Spouses can transfer their entire estate to each other free of IHT. But without planning, the surviving spouse's estate can face a substantial IHT bill — we plan around the combined position.
🌾
Farmers & Agricultural Landowners
Agricultural Property Relief (APR) offers 50% or 100% relief on qualifying agricultural property. We identify qualifying land and structures and ensure the relief is properly maintained.
📈
High Net Worth Individuals
For larger estates, IHT planning involves a combination of gifting, trusts, insurance, business relief and charitable giving — requiring a co-ordinated multi-year strategy.
🏛️
Charitable Givers
Leaving 10% or more of your net estate to charity reduces the IHT rate on the remainder from 40% to 36%. For significant estates, this can represent a meaningful saving while supporting causes you care about.
Planning Strategies

The tools available to reduce your IHT exposure

The effectiveness of each strategy depends on individual circumstances, asset values, family structure and timing. Results will vary. We provide written advice tailored to your situation.

IHT planning draws on a range of strategies, each with its own rules, timescales and implications. We assess which combination is right for your specific circumstances.

01
Nil-Rate Band & Residence Nil-Rate Band Planning
We ensure every element of the nil-rate band (£325,000) and residence nil-rate band (up to £175,000 for qualifying residential property left to direct descendants) is properly utilised — including the transfer of unused allowances between spouses.
02
Annual Gifting & Exempt Transfers
You can give away up to £3,000 per year free from IHT, plus £250 to any number of individuals, and larger amounts for weddings and civil partnerships. Gifts made from surplus income (above living expenses) may also qualify as immediately exempt. We track and document these systematically.
03
Potentially Exempt Transfers (PETs)
Gifts above the exempt amounts become fully exempt from IHT if you survive seven years from the date of the gift. We help structure a gifting programme that progressively removes assets from your estate over time, with tapered relief applying in years three to seven.
04
Business Property Relief (BPR)
Qualifying business assets — including shares in unlisted trading companies, interests in trading partnerships, and certain business property — can attract 50% or 100% BPR, dramatically reducing or eliminating IHT on those assets. We identify qualifying interests and ensure they are properly structured and maintained.
05
Trust Planning
Certain types of trust — including discretionary trusts and interest in possession trusts — can hold assets for the benefit of your family while removing them from your taxable estate over time. Trust planning is complex and requires close collaboration with a specialist solicitor; we advise on the financial and tax dimensions.
06
Life Insurance & Estate Equalisation
A whole-of-life policy written in trust can provide a lump sum to pay the IHT bill on death, preventing your beneficiaries from having to sell assets to fund the tax. This is not a tax saving but can make the IHT liability manageable — and is often the most practical short-term solution for estates already above the threshold.
02
IHT Liability Modelling
We produce detailed IHT calculations showing what your estate would face today and at various future points, taking into account growth in asset values, the impact of existing gifts, and available reliefs.
03
Strategy Recommendations
We present a tailored set of planning recommendations — with the projected IHT saving from each, the time horizon, any risks or limitations, and the practical steps required.
04
Professional Co-ordination
For strategies involving trusts, wills or insurance, we co-ordinate with your solicitor and independent financial advisor to ensure every element of the plan works together and is legally documented.
05
Implementation Support
We assist with the practical implementation of the agreed strategies — including documenting gifts, preparing business relief analyses, and advising on trust elections and appointments.
06
Annual Review
Estate plans need to be revisited as assets values change, legislation evolves, and family circumstances shift. We review your plan and the underlying IHT calculation every year.
What's Included

A comprehensive, co-ordinated estate plan

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FAQ

Frequently asked questions

What is the inheritance tax threshold?
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The standard nil-rate band is currently £325,000 per person. An additional residence nil-rate band of up to £175,000 applies if you leave a qualifying residential property to direct descendants. For married couples and civil partners, any unused allowance transfers to the surviving spouse — giving a combined threshold of up to £1,000,000.
What happens to IHT on my pension?
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Pensions are generally outside your estate for IHT purposes under current rules, as they don't form part of your 'estate' for IHT calculation. However, the Government announced in the October 2024 Budget that pension funds will be brought into scope for IHT from April 2027. We will update our planning advice as this legislation progresses.
Can I give my house to my children to avoid IHT?
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Simply transferring your home to your children while continuing to live in it does not remove it from your estate — HMRC's 'Gift with Reservation of Benefit' rules treat it as still belonging to you. Effective IHT planning around the family home requires careful structuring. We advise on the options available, including downsizing, equity release and partial gifting.
What is a Deed of Variation?
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A Deed of Variation allows beneficiaries to redirect an inheritance they receive under a will (or the intestacy rules) to someone else — and have the redirection treated as if it was made by the deceased. This can be a useful tool for redirecting inheritances to reduce a surviving spouse's estate. It must be completed within two years of death.
How does Business Property Relief work in practice?
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BPR provides 100% relief on shares in qualifying unlisted trading companies and interests in trading partnerships, and 50% relief on qualifying business property used in a trading business. The key conditions are that the asset must have been held for at least two years, the business must be a trading business (not investment), and the relief must be claimed on the IHT return. We identify qualifying interests and produce a detailed analysis.
Is IHT planning just for the very wealthy?
+
No. With UK property prices at current levels, many estates that wouldn't previously have had an IHT problem now face significant liabilities. A £600,000 property owned by an unmarried individual with no children would have an IHT bill of £110,000 above the nil-rate band alone. IHT planning is relevant for anyone with an estate value above the nil-rate band — and the earlier planning starts, the more options are available.

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Estate Planning?

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