Archived article: This article was correct at the time of publishing. Tax, investments and pension rules can change over time so the information below may not be current.

Manage your Inheritance Tax liability with careful planning

With house prices in the UK continuing to rise, more and more people are being pushed into the Inheritance Tax net – the Government has committed to freezing the ‘nil rate band’ at £325,000 until at least 2018, news that won’t make anyone wishing to pass their savings to their heirs happy. A former Labour Chancellor said in the 1980s that “Inheritance Tax is a voluntary levy paid by those who distrust their heirs more than they dislike the Inland Revenue.” Times have changed since then, but the main thinking behind the statement remains the same – an Inheritance Tax liability can be carefully managed, controlled and minimised where possible.

Nick Reeves Nick Reeves
13 March 2015

What is Inheritance Tax?

Inheritance Tax is a tax charge levied on the value of an estate on death, as well as on any gifts made by the deceased within seven years of death. The executors of the estate are appointed in the Will, and are responsible for obtaining valuations of all assets and completing the Inheritance Tax return.

Once the final tax liability is calculated, the executor can then settle the Inheritance Tax liability from the deceased person’s estate. However, the tax must be paid within six months of death, and before the “grant of probate” can be issued. This means that sometimes the executor has to borrow money to settle the liability, or use their own funds – this can happen if it hasn’t been possible to get the money from the estate in time because it’s tied up in assets that have to be sold, for example in property.

The purpose of estate planning therefore is to ensure that the value of your legacy is maximised, so more passes through the generations to the causes you wish. With careful planning, it is possible to manage your estate’s potential Inheritance Tax liability for your beneficiaries (family, friends or charities).

Estate planning can broadly be divided into four areas:

  • Make outright gifts of your savings
  • Make gifts, while retaining some beneficial interest
  • Continue to own the assets outright, but look to mitigate the impact of Inheritance Tax
  • And finally – spend it!

Would you like to find out more about estate planning?

Tilney Bestinvest can help with your estate and Inheritance Tax planning. Our financial planning experts are highly qualified, and we have a network of offices across the UK which means that wherever you are, we can help. You can also download our free guide here to discover more about controlling and managing an Inheritance Tax liability.

Please get in touch with us on 020 7189 2400, request a call back or email us at to get your free initial consultation or to simply find out more.


This article does not constitute personal advice. The value of investments, and the income derived from them, can go down as well as up and you can get back less than you originally invested. Prevailing tax rates and reliefs are dependent on your individual circumstances and are subject to change. If you are in any doubt as to the suitability of an investment, please contact one of our advisers. Please note we do not provide tax advice.