Estate Planning: Secure Your Legacy and Minimise Inheritance Tax

When it comes to estate planning, you want to ensure that your hard-earned assets are passed on to your loved ones and not unnecessarily shared with HMRC. With the Inheritance Tax threshold frozen until at least 2027, it’s crucial to take proactive steps to mitigate the impact of Inheritance Tax on your estate. In this comprehensive guide, we will explore various strategies and considerations for effective estate planning. This includes including making a will, utilising exemptions, gifting, and charitable donations.

Understanding Inheritance Tax

Inheritance Tax is a charge imposed on estates valued above the threshold of £325,000. Any balance over this figure is subject to a 40% tax rate. For instance, if your estate is worth £450,000, it would attract an Inheritance Tax charge of £50,000. However, with careful planning, it’s possible to minimise the impact of Inheritance Tax on your estate. This allows you to maximise the amount to be shared amongst your beneficiaries.

Leaving Your Estate to Your Spouse

If you leave your entire estate to your spouse or civil partner, there is no Inheritance Tax charge. However, it’s essential to consider the long-term implications for your surviving spouse or civil partner. If your spouse or civil partner were to inherit your entire estate, it would mean the value of their estate on their death may amount to the value of their property, assets and investments as well as yours.

In addition, if you have carried out estate planning and have not used all or part of your exemption, your spouse can make use of any unused portions of it.

Additional Allowance for Your Main Residence

Leaving your main residence to your children or grandchildren entitles you to an additional allowance of £175,000. By bequeathing your main residence to your children, you could increase the overall allowance to £500,000. This additional allowance can significantly reduce the Inheritance Tax liability on your estate.

Gifting as an Inheritance Tax Strategy

Making gifts of your assets, property, and investments can help you avoid Inheritance Tax charges. However, it’s crucial to be aware of the “gift with reservation” rule. If you gift an asset but continue to benefit from it,  it will still be considered part of your estate. An example of this would be gifting your house to your child while continuing to live in it rent-free. To ensure the gift is exempt from Inheritance Tax, you must completely divest yourself of the property, assets, or investments and survive for at least seven years after the transfer.

Annual Exemptions and Small Gifts

Taking advantage of annual exemptions can help minimise your Inheritance Tax liability. You can gift up to £3,000 each year without incurring any tax. Additionally, you can make unlimited gifts of £250 per recipient annually. Furthermore, specific one-off gifts, such as £5,000 for a child’s wedding, £2,500 for a grandchild, and £1,000 for others, are also exempt from Inheritance Tax.

The Benefits of Charitable Donations

Making bequests to charities not only supports causes close to your heart but also reduces your Inheritance Tax liability. The value of your bequest to a charity is deducted from the overall value of your estate. Donating 10% or more of your estate to charity can further reduce the Inheritance Tax rate from 40% to 36%.

Seeking Professional Guidance

To navigate the complexities of estate planning and ensure you make informed decisions, it’s crucial to consult with professionals such your solicitor and financial adviser. They can provide expert advice tailored to your specific circumstances and help you develop a comprehensive estate plan. By planning ahead and implementing effective strategies, you can minimise the impact of Inheritance Tax and ensure your beneficiaries receive the maximum share of your estate.


Effective estate planning is vital to secure your legacy and minimise the amount of your estate shared with HMRC. By making a Will, leveraging exemptions, considering gifting options, and incorporating charitable donations, you can optimize your estate plan and protect your assets for future generations. Seek professional guidance to ensure your estate plan reflects your wishes and maximises the benefits for your loved ones. Don’t let your beneficiaries share your estate with the taxman—take proactive steps today to secure your legacy.

Additional Information: Failure to carry out effective estate planning may lead to HMRC being entitled to a portion of your estate.

Experienced Estate Planning Solicitors in Rutherglen, Glasgow and Central Scotland

Our solicitors are experienced in advising clients on all aspects of estates planning including preparing Wills and advising on Inheritance Tax planning options. Please contact us if you would like to discuss your options.