Inheritance Tax Planning

Inheritance Tax Planning in Peterborough, Market Deeping and Bourne

Understand how Inheritance Tax could affect your estate and the options available to you.

Your home, savings and other assets may represent many years of work. Planning how they will pass to the people you care about starts with understanding your circumstances, the available allowances and your own future financial needs.

Liberty Estate Planning helps individuals and families consider Inheritance Tax as part of their wider Estate Planning. We offer appointments at our Market Deeping and Bourne offices, supporting clients across Peterborough and the surrounding areas, with remote appointments also available.

Discuss your Inheritance Tax Planning

What is Inheritance Tax?

Inheritance Tax is a tax that may be payable on your estate after your death. Your estate can include property, money, investments and personal possessions. Certain gifts made during your lifetime may also affect the calculation.

The standard rate is 40%, normally applied to the taxable amount above the available allowances after relevant exemptions and reliefs.

Not every estate has Inheritance Tax to pay. The position depends on the assets involved, who inherits and which allowances apply.

What are the current Inheritance Tax allowances?

The £325,000 nil-rate band

The standard Inheritance Tax allowance, known as the nil-rate band, is currently £325,000 per person.

Certain lifetime gifts can use some or all of this allowance, so the amount available against your estate may be lower.

The additional allowance for passing on a home

An additional allowance of up to £175,000, called the residence nil-rate band, may apply when a qualifying home passes to direct descendants, such as children or grandchildren.

This can bring an individual’s combined allowances to £500,000, where the conditions are met.

The residence nil-rate band reduces by £1 for every £2 that an estate exceeds £2 million. Its availability also depends on the property’s value and how it passes to beneficiaries.

Allowances for married couples and civil partners

Transfers between spouses or civil partners are generally exempt from Inheritance Tax, although particular circumstances can affect that treatment.

Unused allowances may also be transferable to a surviving spouse or civil partner. A qualifying surviving partner’s estate could therefore have combined allowances of up to £1 million.

This is not an automatic allowance for every couple. Eligibility and the arrangements on each death need to be considered. Unmarried partners do not receive the same spouse exemption or transferable allowances.

How we can help with Inheritance Tax Planning

We start by understanding your family, your assets and what you want your Estate Planning to achieve.

The discussion may cover:

• Which allowances and exemptions may be relevant.
• How your existing Will provides for your beneficiaries.
• The effect of property ownership and family circumstances.
• Previous gifts and any further gifts you are considering.
• Whether Trust Planning has a suitable role.
• How proposed arrangements could affect your own financial security.
• Where additional specialist tax or regulated financial advice may be needed.

The aim is to help you make informed decisions about passing on assets while keeping your own needs firmly in view.

Reviewing your Will and family arrangements

Your Will should reflect who you want to provide for and how you want them to inherit.

A review can be particularly useful if you have remarried, have children from a previous relationship, want to support a vulnerable beneficiary or have experienced a significant change in your assets.

Tax is one consideration alongside these personal priorities. We can discuss how your wishes fit with your wider Estate Planning and whether your Will needs updating.

Making gifts during your lifetime

You may want to help children, grandchildren or other people while you are alive. The tax treatment depends on the type of gift, its value and your circumstances.

Gifts covered by exemptions

The annual gifting exemption is currently £3,000 in total per tax year, with unused allowance normally carried forward for one tax year.

Other exemptions may apply to certain small gifts, wedding gifts and regular gifts from income. Each has conditions, so they should be considered before making payments.

The seven-year rule

Many outright gifts to individuals fall outside your estate for Inheritance Tax if you survive for seven years after making them.

If you die sooner, the gift may affect the tax calculation. Different rules can apply to Trust transfers and gifts from which you continue to benefit.

Keep records of what you give, its value, the recipient and the date.

Before giving assets away, consider whether you may need them for your own living costs, retirement or future care. A tax saving should not come at the expense of your financial independence.

Can Trusts help with Inheritance Tax?

Trusts can have a role in Estate Planning, but placing assets into a Trust does not automatically make them free from Inheritance Tax.

Depending on the arrangement, charges can arise when assets enter the Trust, during its lifetime and when assets leave. Other taxes and ongoing administration may also apply.

We can discuss whether a Trust serves a useful purpose for your family and what its implications would be.

Read more about Trust Planning.

Changes that may affect your planning

Pensions from April 2027

For deaths on or after 6 April 2027, most unused pension funds and pension death benefits will be included in the estate for Inheritance Tax purposes. Exceptions apply, including qualifying death-in-service benefits.

These changes may affect plans based on leaving pension funds to beneficiaries. Pension decisions should be considered alongside retirement income needs and, where appropriate, advice from a regulated financial adviser.

Business and agricultural assets

Business and Agricultural Relief have qualifying conditions and limits. Changes applying from 6 April 2026 mean older assumptions about full relief should be reviewed.

If your estate includes a business, shares or agricultural property, specialist advice may be needed alongside your Will and Estate Planning.

When should you seek advice?

It may be useful to review your position if:

• Your property and other assets have increased in value.
• You have received an inheritance.
• You are considering a substantial gift.
• Your family circumstances have changed.
• You own more than one property.
• You have business interests, agricultural assets or overseas connections.
• Your existing arrangements were made several years ago.

Starting early gives you time to understand the options and consider their consequences.

Getting started with Liberty Estate Planning

1. Arrange an initial discussion

Tell us what you would like to achieve and any particular concerns about your estate or beneficiaries.

2. Bring an outline of your circumstances

Useful information includes your existing Will, approximate asset values, significant debts, pension details and records of gifts already made. We will explain what further information is needed.

3. Understand the proposed work

We discuss the relevant Estate Planning options, the scope of our advice and the fees before you decide how to proceed.

4. Review your arrangements over time

Changes in your family, assets or tax rules can affect earlier decisions. Reviewing your plan helps identify when further advice or updated documents may be needed.

Frequently asked questions

Will my family pay 40% on everything I leave?

No. The standard rate normally applies to the taxable part of your estate after available allowances, exemptions and reliefs. Your individual circumstances determine the calculation.

Can I give my home to my children and continue living there?

Continuing to live in a property after giving it away can mean it remains part of your estate under the “gift with reservation” rules. Simply transferring ownership and waiting seven years does not necessarily remove it from Inheritance Tax.

Get advice before transferring your home, including consideration of your housing security and other tax consequences.

Do gifts become completely tax-free after three years?

No. Where taper relief applies, it reduces the tax payable on certain gifts made between three and seven years before death. It does not reduce the value of the gift or apply to every gift.

Is Inheritance Tax Planning only for wealthy families?

No. Property values, savings and other assets can make it worthwhile checking your position. Advice can also confirm where no immediate tax planning is needed and help you focus on suitable Wills and other arrangements.

Can you guarantee that my estate will pay no Inheritance Tax?

No. The outcome depends on your circumstances, the arrangements made and the rules applying at the relevant time. Advice should explain the realistic options and their limitations.

How much does advice cost?

The cost depends on the complexity of your circumstances and the work required. We will explain the proposed scope and fees before proceeding. You can also view our price list for common Estate Planning services.