Inheritance Tax (IHT) planning can make a huge difference to the amount your loved ones receive—but it’s easy to get it wrong. Here are some of the most common mistakes we see, and how to avoid them.
Not making a Will
It sounds simple, but many people still die without a will. This means the estate is distributed according to the rules of intestacy, which may not reflect your wishes—and can lead to unnecessary tax and family disputes.
Giving away too many gifts, too late
Lifetime gifts can reduce the value of your estate for IHT purposes, but they need to be made at least seven years before death to be fully exempt. Leaving it too late means the gift may still be taxed.
Forgetting about the nil-rate bands
Everyone has a £325,000 nil-rate band, and many also qualify for the £175,000 residence nil-rate band. But these allowances must be claimed and structured correctly—especially when trusts or second marriages are involved.
Overlooking the spouse exemption
Leaving everything to your spouse is tax-free—but it may not be the most efficient strategy. It can push the surviving spouse’s estate over the IHT threshold, leading to a bigger bill later on.
Misusing trusts
Trusts can be powerful tools, but they need to be set up carefully. The wrong type of trust—or unclear wording—can result in losing valuable reliefs like the residence nil-rate band.
Not keeping records of gifts
If you make regular gifts out of income, they can be exempt from IHT—but only if you keep proper records. Without documentation, HMRC may challenge the exemption.
Ignoring pension planning
Pensions are often outside your estate for IHT purposes. Failing to nominate beneficiaries or review your pension arrangements can mean missing out on a major tax-saving opportunity. The rules relating to pensions and IHT are changing in 2027.
Not reviewing your IHT plan
Life changes—marriage, divorce, children, property sales. Your IHT plan should change too. A will or trust that made sense ten years ago might not be right today.
DIY inheritance tax planning without advice
Online templates and “off-the-shelf” solutions can be tempting, but IHT is complex. A small mistake can cost thousands in tax—or worse, lead to a legal challenge.
Failing to act at all on inheritance tax planning
The biggest mistake of all is doing nothing. IHT planning doesn’t have to be complicated, but it does need to be done. The earlier you start, the more options you’ll have.
Kidd Rapinets’ Will and Probate team help clients create clear, practical plans that protect their assets and minimise tax. Whether you’re just starting out or reviewing an existing plan, we’re here to guide you every step of the way.
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