Pensions Advice UK does not provide financial advice or tax advice. We act solely as an introducer.The information here is general information to help you understand your options – the FCA-authorised adviser we introduce you to can look at your own circumstances and recommend what is right for you.
Could your family face an inheritance tax bill?
First, understand your allowances
Everyone has a tax-free allowance called the nil-rate band, currently £325,000. If you leave your main home to your children or grandchildren, you may get an additional residence nil-rate band of up to £175,000. That can take an individual’s tax-free total to £500,000.
Married couples and civil partners can usually pass everything to each other tax-free and combine their allowances, so a couple leaving a home to direct descendants can often pass on up to £1 million before any inheritance tax is due. Anything above your allowances is generally taxed at 40%.
Because these thresholds have been frozen for years while property and investments have risen, many families who never thought of themselves as wealthy are now caught – which is why reviewing your position matters.
The main ways families reduce inheritance tax
Using your gift allowances. You can give away up to £3,000 each tax year free of inheritance tax, and if you did not use last year’s allowance you can carry it forward once. Small regular gifts and gifts on marriage have their own exemptions too. Used consistently over many years, gifting alone can take a meaningful sum out of your estate.
Gifts from surplus income. Regular gifts made out of income you genuinely do not need – rather than from capital – can be immediately exempt, provided they are properly documented and do not affect your standard of living. This is one of the most useful and least understood reliefs.
The seven-year rule. Larger one-off gifts usually fall out of your estate entirely if you live for seven years after making them, with the tax tapering down between years three and seven. Starting early is what makes this work.
Spousal transfer. Anything you leave to your husband, wife or civil partner is normally free of inheritance tax, and your unused allowances pass to them – the cornerstone of most couples’ planning.
Trusts. Placing assets in trust can remove them from your estate while keeping some control over how and when they are used. Trusts are powerful but complex, with their own tax rules, and are an area where advice really matters.
Pensions. Pensions have long been a tax-efficient way to pass on wealth, though the rules are changing from April 2027 – see our dedicated page on pensions and inheritance tax for that specific issue.
Business and agricultural relief, and charitable giving. Certain business and farming assets can qualify for relief, and leaving at least 10% of your estate to charity can reduce the rate of inheritance tax on the rest. Whether these apply depends entirely on your circumstances.
Why the big savings need advice
Anyone can use the simple allowances – the gift exemptions and the spousal transfer. Used well, they make a real difference. But the larger savings usually come from combining several strategies in the right order, and that is where it gets technical and where mistakes get expensive.
Give too much away and you could leave yourself short.
Set up the wrong sort of trust, or document gifts poorly, and the intended saving can unravel.
Get the interaction between pensions, property and other assets wrong and a family can face a far bigger bill than necessary. A qualified adviser looks at your whole position – your assets, your family, your income needs and your wishes – and builds a plan that fits, often working alongside a solicitor for the legal documents.
That personalised assessment is something we cannot do for you, which is why we introduce you to an authorised firm.
Submitting your enquiry is free. Any fees for advice will be explained to you directly by the authorised firm before you proceed.
NOTE: (We do not provide financial advice or tax advice. We act solely as an introducer)
Common questions
How much can I leave before inheritance tax is due?
Currently £325,000 per person, rising to as much as £500,000 if you leave your main home to direct descendants, and up to £1 million for a married couple or civil partnership. Above your allowances, the rate is generally 40%.
How much can I give away to avoid inheritance tax?
You can give £3,000 a year under the annual exemption (£6,000 if you carry forward an unused year), plus certain other exempt gifts. Larger gifts usually leave your estate after seven years. An adviser can help you gift in a way that is effective and that you can afford.
Do I need a solicitor or a financial adviser?
Often both. A financial adviser builds the plan and handles the financial products; a solicitor draws up the wills and trust documents. We introduce you to an FCA-authorised adviser, who can work alongside a solicitor where needed.
Is it too late to plan if I am older?
Rarely. Some options work best started early, but others can help at any stage. The sooner you review your position, the more choices you keep open.
Will my pension be part of my estate?
From April 2027, most unused pensions are due to count towards your estate for inheritance tax. See our page on pensions and inheritance tax for that specific change.