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Tips for Minimizing Your Liability

Navigating Inheritance Tax

Let’s explore some valuable insights and tips to help you navigate Inheritance Tax effectively.

Inheritance Tax (IHT) is a topic that often leads to confusion and anxiety. Mitigating this liability is crucial for preserving your assets and securing your family's financial future. 

Understanding Inheritance Tax

Before we delve into strategies for minimizing your IHT liability, let's grasp the basics. The current basic threshold for IHT in the UK is £325,000, known as the "nil rate band." Anything above this threshold is subject to a 40% tax rate.

Married couples don't pay Inheritance Tax on inheritances they leave for each other. On the second death, they can add their Nil Rate Bands together.

Homeowners who want to leave their house to their children or other direct descendants get an additional Residence Nil Rate Band of up to £175,000 per person, or £350,000 per couple.

 Tip 1: Start Early

One of the most effective ways to minimize your IHT liability is to begin your estate planning early. Don't wait until retirement or later in life; consider your options sooner rather than later. This allows you to make strategic decisions and optimize your assets over time.

 Tip 2: Make Use of Tax-Free Allowances

Several tax-free allowances can help reduce your IHT liability:

  • If you make the most of your Nil Rate Band, you can leave up to £500,000, or £1million between you if you are a married couple, before Inheritance Tax kicks in.
  •  Annual Gift Allowance: You can give gifts up to £3,000 per year free of IHT.
  •  Small Gifts Allowance: You can give small gifts of up to £250 IHT-free.
  •  Wedding Gifts: Specific allowances apply for wedding gifts to family members.
  • Gifts out of Income: you can make as many gifts as you like out of your regular income (rather than you're savings). This can include giving regulate financial support to a family member, such as paying towards a grandchild’s school fees.

 Tip 3: Consider Exemptions

Certain gifts are exempt from IHT, such as gifts between spouses. You give as much money as you like to your spouse or civil partner.

If you give a large gift to someone else, it is potentially exempt from Inheritance Tax. It will become fully exempt if you live for at least seven years after giving the gift.

Giving to charity is not only good for your soul, it's also good for your IHT bill. Charitable legacies are IHT-free, and if you leave at least 10% of your estate to charity, you rate of IHT drops from 40% to 36%.

 Tip 4: Explore Trusts

Trusts can be an effective way to protect your assets from IHT. You can put up to £325,000-worth of assets into trust for someone else every seven years throughout your lifetime, so long as you relinquish all benefit of the asset. By placing assets into a trust, you remove them from your estate, potentially reducing your IHT liability. Seek professional advice to ensure you set up the right trust for your needs.

 Tip 5: Life Insurance

Life insurance policies that pay out to the executors of your Will are a great way to provide a tax-free lump sum to cover your IHT liability. This ensures your loved ones receive the full value of your estate.

 Tip 6: Seek Professional Guidance

Estate planning and IHT can be complex. With support form your solicitor, accountant and financial advisor, you can navigate the intricacies of IHT and tailor a plan to your specific circumstances.


Minimizing your Inheritance Tax liability is a vital component of responsible estate planning. By starting early, taking advantage of allowances and exemptions, considering trusts and life insurance, and seeking professional guidance, you can protect your assets and provide financial security for your loved ones.

Feel free to contact us to discuss your unique situation and craft a strategy that ensures your family's financial wellbeing for generations to come. Call us on 0151 601 5399, or email us at, or book a free online consultation by visiting our booking page here.

"As an engaged couple with a portfolio of rental properties, we wanted to make sure that we were both well provided for if anything ever happened to one of us, and we were also worried about Inheritance Tax. Our financial advisor recommended that we seek advice from Will Written. Gina was very organised and reassuring. She explained everything to us very clearly. We know where we stand and we found out a lot that we didn't know before. Having made our wills, we feel we have nothing to worry about, we are happy that we have been sensible and haven't put off making our wills unnecessarily. "

Denise R & David D

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