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Inheritance Tax Planning Advice

Inheritance Tax (IHT) Exemptions & Reliefs: How to Reduce Your IHT Liability

There are several exemptions and reliefs available that can help reduce the amount of inheritance tax owed on your estate. Understanding how and when to use them is key to effective IHT planning.
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Discover the main IHT exemptions and inheritance tax reliefs that can reduce the tax due on your estate. This page explains the rules on gifts, the seven-year rule, and key reliefs such as Business Relief and Agricultural Relief, with clear examples to help you plan confidently.

Inheritance Tax (IHT) Exemptions and Reliefs

There are several exemptions and reliefs that can reduce the Inheritance Tax (IHT) liability:

Inheritance Tax (IHT) exemptions and reliefs are legal allowances that reduce the amount of tax payable on your estate. Used correctly, they can lower your IHT bill - or eliminate it entirely.

These are not loopholes; they are HMRC-approved and form a vital part of effective estate planning.
Nil-Rate Band (NRB): Every individual has a £325,000 tax-free allowance - this is called the Nil-Rate Band. If your estate is below this, no IHT is due.
Residence Nil-Rate Band (RNRB): If you pass your home to a direct descendant (child, grandchild), you may get an additional £175,000 tax-free allowance - bringing your total to £500,000.
Spouse or Civil Partner IHT Exemption: Assets passed to a spouse or civil partner are 100% exempt from IHT. They can also inherit your unused allowances.
Charity IHT Exemption: Gifts to UK-registered charities are exempt from inheritance tax - and may reduce your overall IHT rate from 40% to 36% if at least 10% of your estate is donated.
Annual IHT Exemption: You can give away up to £3,000 each tax year free from IHT - plus carry forward unused allowance from the previous year.
Small Gifts IHT Exemption: You can give up to £250 per person per tax year, to as many people as you like, as long as they haven’t benefited from other exemptions.
Gifts for Weddings or Civil Partnerships: You can give between £1,000 and £5,000 depending on your relationship to the recipient.
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IHT Reliefs That Could Save You More

Business Relief

Up to 100% relief on qualifying business assets, including shares in an unlisted company. Must be held for 2+ years.

Agricultural Relief

Up to 100% relief on agricultural property used for farming. Must meet strict usage and ownership conditions.

Taper Relief

If you gift assets and survive between 3–7 years, IHT is reduced on a sliding scale. Gifts after 7 years are usually IHT-free.
Business Relief & Agricultural Relief invest in assets that are high risk and can be difficult to sell. The value of the investment and the income from it can fall as well as rise and investors may not get back what they originally invested, even taking into account the tax benefits.
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How We Help You Maxmise IHT Reliefs

Calculate your eligibility for exemptions and reliefs
Identify overlooked areas where tax can be reduced
Recommend actions like gifting, trust use, and pension drawdown
Ensure compliance with HMRC rules

How to Plan for Inheritance Tax (IHT Planning)

Effective estate planning can minimise the impact of Inheritance Tax (IHT). Here are some strategies:

Make a Will

Ensure your wishes are clearly outlined in your will, so your estate is distributed exactly as you intend. Without a will, your assets may not go to the people you want, and your loved ones could face legal complexities or unexpected tax burdens. Making a will gives you peace of mind, protects your family’s future, and ensures everything is handled according to your wishes.

Consider Trusts

Placing assets in a trust can help protect them from Inheritance Tax (IHT), ensuring they are managed and distributed according to your wishes. By using trusts, you can control how your wealth is passed on, potentially reduce tax liabilities, and provide financial security for future generations.

Regularly Review 
Your Estate:

Life events such as marriage, divorce, the birth of children, or even the death of a loved one can significantly impact your estate plan. It’s important to regularly review and update your plan to reflect these changes, ensuring that your wishes remain accurate and your loved ones are protected.

How Can I Reduce My IHT bill?

The main approach to IHT mitigation is to reduce the value of your estate over a number of years. The smaller your estate when you die, the less your IHT bill is likely to be.

There are many approaches to reducing your IHT liability, such as those outlined below. Some are more complex than others and some may not be suitable for you, so it is always important to get professional financial advice.
Utilise potentially exempt transfers.
Ensure assets are individually owed at least up to nil-rate band values.
Own assets which are not liable to inheritance tax.
Write your life assurance policy/policies into trust.
Put gifts in trust for beneficiaries.
Leave at least 10% of your net estate to charity, this will reduce the IHT rate to 36%.
Utilise any unused NRB and RNRB from deceased spouse or civil partner.
Write a Will.

Understanding and planning for Inheritance Tax (IHT) is crucial for protecting your family's financial future. By taking proactive steps, you can ensure that more of your estate is passed on to your loved ones rather than going to the taxman. 

We offer complimentary consultations with a local financial adviser, including a free review of your assets and estate, along with our expert recommendations. There’s no obligation - fees only apply if you choose to proceed with our advice.
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Free Inheritance Tax (IHT) Planning Consultation

Ready to take control of your estate and protect your loved ones? Complete the form below to start your personalised Inheritance Tax planning consultation. 

Our IHT advisers will review your situation and get in touch with tailored advice to help you minimise liability and pass on more of your legacy.
Inheritance Tax (IHT) Planning - Reduce Your IHT Liability

Tax treatment varies according to individual circumstances and is subject to change.

The guidance and/or information contained within this website is subject to the UK regulatory regime and is therefore targeted at consumers based in the UK.

Approver Quilter Financial Services Limited. March 2025

Registered office address: Unit 1 Fulcrum 2 Solent Way, Whiteley, Fareham, England, PO15 7FN. Registered in England and Wales under reference 08286166
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