Experienced – Collaborative – Professional

inheritance tax & estate planning advice

As Benjamin Franklin said, the only things that are certain in life are death and taxes, and inheritance tax touches on both of them.

Willow’s independent financial advisors specialise in providing helpful Estate Planning and Inheritance Tax information

Keep reading to learn more about Inheritance Tax, or contact a member of our friendly, knowledgeable team and we will be happy to answer your questions: 01702 667 315

Contact us
Inheritance Tax & Estate Planning Advice


Our highly experienced team will work just as hard to ensure you continue to succeed.


At the heart of everything we do is a desire to offer a service that clients value.


We offer technical expertise, reliability, efficiency and a bit of imagination.

what happens when i die?

When you die, the Government assesses how much your estate is worth, then deducts your debts from this to give the value of your estate.

Your assets include:

  • Cash in the bank
  • Investments
  • Any property or business you own
  • Vehicles
  • Payouts from life insurance policies

the big question is, how much tax do you pay?

Your estate will owe tax at 40 per cent on anything above the inheritance tax (IHT) threshold when you die (or 36 per cent if you leave at least 10 per cent to a charity).

Dealing with it is one of the biggest single things you can do, as some simple actions can save you £100,000s. Yet sadly many people ignore it, either not wanting to consider the future or simply unable to broach it with relatives for fear of seeming grasping.

who pays inheritance tax?

Everyone is allowed to leave an estate up to their nil rate threshold, without their beneficiaries paying tax.

The amount is set by the Government and is called the nil-rate band, because it’s the amount you pay a ‘nil-rate’ of IHT on.

Above that amount, anything you leave behind is subject to tax as mentioned above.

So for example, if you leave behind assets worth £500,000, your estate pays nothing on the first £325,000, and 40 per cent on the remaining £175,000 – a total of £70,000 in tax – if you’re not leaving anything to charity.

From 2017 the current £325,000 tax-free threshold will increase to include a main residence allowance of £175,000, effectively increasing the total tax-free threshold to £1 million for married couples and civil partners.

exemptions from inheritance tax

People in certain ‘risky’ roles are exempt from paying inheritance tax if they die in active service. Included in this are armed forces personnel, police, fire fighters and paramedics, plus humanitarian aid workers.

The exemption also comes into play if a person who was injured on active service has their death hastened by the injury, even if they’re no longer on active service.

why do we have to pay iht?

The idea is that without it you perpetuate inherited wealth, so the children of the rich stay rich. Inheritance tax redistributes income so some of the money goes to the state to be distributed for the benefit of all.

The argument against it is that when money’s earned, tax is paid at the time, so to pay tax on it again isn’t fair.

am i exempt if i’m married?

When you die, any assets left to your spouse or registered civil partner, provided they’re UK-domiciled, are exempt from inheritance tax. On top of this, your partner’s inheritance tax allowance rises by the amount you didn’t leave to others, meaning together a couple can currently leave £650,000 tax-free.

what if i’m not married?

While transfers of property and other assets between married couples or civil partners don’t attract inheritance tax, this isn’t the case for unmarried couples.

If you’re not married, but own assets jointly with another person, the situation gets complicated, especially where a residential property is involved. Your liability to pay IHT will depend on whether you and your partner own the property as ‘joint tenants’ or ‘tenants in common’ and whether there’s a will.

If you’re joint tenants (you both own all the property), and your partner’s left you everything in the will, then if your partner’s assets, including the property, exceed the £325,000 inheritance tax threshold, you’d have to pay it on any assets in the estate above that. After your partner’s death, your property would then be owned by you in its entirety.

However, if your partner didn’t leave a will, his or her family would have a claim to your partner’s share, though they wouldn’t be able to throw you out of the house, as you still own it all – as do they.

can i reduce the bill in any other way?

Money given away before you die is still usually counted as part of your estate, hence it’s subject to inheritance tax if you die within seven years of giving the gift. Therefore one golden rule is to try to survive more than seven years – which means early planning of how to pass on your assets is important.

If you make large lifetime gifts, the beneficiaries could take out life insurance against the potential inheritance tax bill. Most gifts into trust are now subject to inheritance tax even if made during your lifetime, but this is an area where you would need specialist advice.

However, even if you do die within seven years of making a gift, there are a range of other exemptions worth taking into account to help lessen the tax bill:

  • You can give £3,000 away each tax year inheritance tax-free
  • Gifts to charities and political parties are inheritance tax-free
  • You can give £250 each year to everyone you know
  • How are gifts from your income treated?
  • There’s no inheritance tax on a wedding or civil partnership gift worth up to:
  • £5,000 given to a child
  • £2,500 given to a grandchild or great-grandchild
  • £1,000 given to anyone else
  • The gift must be given on or shortly before the date of the wedding or civil partnership ceremony.

what constitutes a gift?

A gift must be a genuine unconditional gift that you will not gain from; something given to someone without any reservation, no nods, winks or mutual back-scratching.

The biggest asset most people have is their house, yet trying to give half of this to your children won’t work if you continue to live in it.

Many gifts are a valid ways of reducing your inheritance tax bill. Yet if any (barring the gift on consideration of marriage) are given conditionally, with the intention of receiving something in return, they could fail to work, so watch out.

Willow provides clients in Essex advice about estate planning and inheritance tax planning, including Benfleet, Rayleigh and Westcliff.

Speak to Willow’s Inheritance Tax & Estate Planning Experts

Call 01702 667 315 or contact our financial advisors for more information about Inheritance Tax and Estate Planning.

Contact us