Think Inheritance Tax Only Affects the Rich? Think Again!

Inheritance Tax (IHT) is often associated with grand estates and sprawling mansions. But the reality is, IHT can impact a wider range of people than you might think. Here’s a breakdown of why inheritance tax isn’t just for the super-wealthy and what steps you can take to minimise its impact on your loved ones.

The Inheritance Tax Threshold: Not as High as You Think

Currently, the inheritance tax threshold in the UK sits at £325,000. That means anything above this amount in your estate is subject to IHT at a rate of 40%. While this may seem like a high bar, consider the rising cost of property and accumulated assets over a lifetime. Even a modest home, savings, and personal possessions can easily push an estate over the threshold.

Unexpected Tax Bills for Your Loved Ones

Imagine this: you pass away leaving behind a house valued at £400,000 and some savings. After subtracting the threshold, your loved ones are hit with an inheritance tax bill of £30,000 (40% of the £75,000 exceeding the threshold). This unexpected financial burden can cause stress and strain during an already difficult time.

Factors That Can Push You Over the Threshold

Here are some everyday scenarios that can unexpectedly bring your estate value above the IHT threshold:

  • Inheriting Assets Yourself: If you inherit assets that push your total estate value over the threshold, you could be liable for IHT on the combined amount.
  • Rising Property Values: The housing market can be unpredictable. If your property value has significantly increased over time, it could tip your estate over the threshold.
  • Undervalued Assets: Don’t underestimate the value of personal possessions like art collections, jewellery, or antiques. These can add up and contribute to your estate value.

Taking Action: Planning for the Future

IHT doesn’t have to be a looming threat. Here are some proactive steps you can take to minimize its impact on your loved ones:

  • Open Communication: Talk to your family about your estate and your wishes.
  • Financial Planning: Consider seeking professional financial advice to explore IHT-efficient strategies like gifting allowances or trusts.
  • Life Insurance: A life insurance policy can provide your beneficiaries with a tax-free lump sum to help cover potential inheritance tax bills.

Remember: Inheritance Tax isn’t just for the wealthy. By understanding the implications and taking proactive steps, you can ensure your legacy is one of love and financial security for your loved ones.

Want to Learn More?

We understand navigating inheritance tax can be complex. We offer a wealth of resources and guidance to help you plan for the future and minimise the impact of IHT on your loved ones. Contact us today for a no-obligation consultation.

Back to posts

Stay in touch

Get the latest news & updates from IMC and the financial sector

"*" indicates required fields

Stamp Duty Calculator

Mortgage Application

First Time Buyer

Mortgage Application

Buying A Home

Mortgage Application

Buy To Let Purchase

Mortgage Application


Mortgage Application

Buy To Let Remortgage