Inheritance tax is usually charged at 40% on the value of your estate above the tax‑free allowance. Currently, everyone has a nil‑rate band of £325,000, and in some cases an additional residence nil‑rate band of up to £175,000 can apply when passing a main home to direct descendants.

However, the actual tax bill depends on many factors, including property ownership, marital status, lifetime gifts, trusts and exemptions. In some situations, HMRC can end up receiving more from an estate than each individual beneficiary if no planning is in place, which is why understanding your full position early is important.

Yes, making gifts can be an effective way to reduce inheritance tax, but the rules are more complex than they first appear.

Some gifts are immediately exempt, such as annual allowances, small gifts and gifts from surplus income. Larger gifts are usually treated as potentially exempt transfers, meaning they only become fully free of inheritance tax if you live for at least seven years after making the gift.

If you die within seven years, taper relief may reduce the tax payable – but only on amounts above the nil‑rate band. Gifting also needs to be balanced against your future income and care needs, so it’s important not to give away assets you may later rely on.

The residence nil‑rate band is an additional inheritance tax allowance that can apply when you leave your main home to your children or other direct descendants. It can increase the tax‑free amount passed on by up to £175,000 per person, potentially allowing a couple to pass on up to £1 million free of inheritance tax.

However, this allowance can be reduced or lost entirely if the value of your estate exceeds £2 million, or if the property is not passed directly to qualifying beneficiaries. Certain trust arrangements can also affect whether the allowance applies, which makes planning particularly important for property‑rich families.

Trusts can be a powerful way to control and protect assets while managing inheritance tax, but they come with important rules and responsibilities.

Different types of trusts, such as discretionary trusts, life interest trusts or discounted gift trusts, are designed for different purposes. Some remove assets from your estate immediately, while others allow access to income or capital while still offering inheritance tax benefits over time.

Trusts can help avoid probate delays, provide flexibility for beneficiaries and ring‑fence assets for future generations, but they can also trigger immediate or ongoing tax charges if set up incorrectly. Professional advice is essential to ensure the trust is suitable for your circumstances

No. In fact, many of the most effective inheritance tax planning strategies rely on time.

Gifting rules, taper relief and trust planning often work best when action is taken earlier, while you’re still financially comfortable and have greater flexibility. Waiting too long can significantly reduce the options available, particularly if health, income needs or care considerations change.

Inheritance tax planning isn’t about rushing decisions; it’s about understanding your position early, so you can make informed choices at the right pace.