Inheritance Tax Advice

Inheritance tax (IHT) is a tax on the value of a person’s estate, including their property, savings, and possessions, after they die. With the right planning, many families can significantly reduce the tax their loved ones will face.

Rising property values across Bristol and the wider South West mean more estates are being caught above the tax-free threshold than ever before. If you own a home, have savings, or want to pass wealth to your children or grandchildren, it’s worth taking advice sooner rather than later.

At Lyons Solicitors, our Wills, trusts and probate team offers practical, plain-English IHT planning advice to individuals and families across Bristol, North and North East Somerset, and South Gloucestershire. We have three offices in Westbury-on-Trym, Kingswood, and Chew Magna, and we’re always happy to communicate in the way that works best for you.

Speak to our inheritance tax solicitors in Bristol

We offer a free first consultation to answer your questions and help you understand where you stand.

To book a free initial consultation with our inheritance tax solicitors in Chew Magna, Kingswood, or Westbury-on-Trym, please get in touch today. You can use the contact details for each office or fill in the enquiry form on the right-hand side of the page to request a call back.

What is inheritance tax, and who pays it?

IHT is charged at 40% on the portion of an estate that exceeds the tax-free threshold. It’s typically paid out of the estate before assets are distributed to beneficiaries.

Not all assets are subject to IHT. Assets passed to a spouse or civil partner are entirely exempt, as are gifts to registered charities. If your estate falls below the threshold, or you’ve made effective use of the reliefs and exemptions available to you, no IHT will be due.

UK inheritance tax thresholds and allowances

Understanding the allowances available to you is the starting point for any IHT plan. Most people can make use of more than one.

The nil-rate band (£325,000)

Every individual has a nil-rate band (NRB) of £325,000. This is the amount of your estate that can pass free of IHT. Anything above this figure is taxed at 40%.

The residence nil-rate band (£175,000)

If you leave your home to your children or grandchildren, including stepchildren and adopted children, you may qualify for the residence nil-rate band (RNRB) of up to £175,000. Combined with the NRB, this brings your total personal allowance to £500,000. The RNRB is gradually reduced for estates valued above £2,000,000.

Transferable allowances between spouses

Married couples and civil partners can transfer any unused NRB and RNRB to the surviving partner. This means a couple could potentially leave up to £1,000,000 to their children free of tax, by combining both nil-rate bands and both residence nil-rate bands, provided all conditions are met.

How to reduce inheritance tax: planning strategies

Good IHT planning can significantly reduce the tax your estate will pay. There’s no single solution; the right approach depends on your circumstances and the make-up of your estate. We’ll always explain both the benefits and any potential risks before recommending a course of action.

Lifetime gifts and the 7-year rule

Giving away assets during your lifetime reduces the value of your estate for IHT purposes. Gifts made more than seven years before your death are generally exempt from IHT. Gifts made within seven years may still attract tax, though taper relief reduces the rate on a sliding scale for gifts made between three and seven years before death:

3 to 4 years before death: 32%
4 to 5 years before death: 24%
5 to 6 years before death: 16%
6 to 7 years before death: 8%

Taper relief only applies where the total value of gifts exceeds the nil-rate band. You can also use your annual exemption, which allows you to give away £3,000 per year free of IHT regardless of the seven-year rule. Additional exemptions apply to small gifts of up to £250 per person per year, and to regular gifts made from surplus income.

Using trusts for IHT planning

Trusts can be an effective way to pass assets to your family while reducing your IHT exposure. Placing assets into a trust may remove them from your estate for IHT purposes, subject to certain conditions.

Trusts also let you control how and when your beneficiaries receive their inheritance, which can be especially useful in blended families or where beneficiaries are young.

We can advise on the range of trust structures available and help you decide whether a trust is the right choice for your situation.

Business Property Relief and Agricultural Property Relief

If you own a business or agricultural land, you may qualify for significant reliefs. Business Property Relief (BPR) can reduce the taxable value of qualifying business assets by 50% or 100%.

Agricultural Property Relief (APR) works similarly for qualifying agricultural property and land. These reliefs can be highly valuable, and specialist advice is essential to ensure your assets meet the qualifying conditions.

Charitable giving

Leaving at least 10% of your net estate to charity reduces the IHT rate on the remainder from 40% to 36%. This can benefit both your chosen causes and your beneficiaries, making it a meaningful and tax-efficient part of your estate plan.

Life insurance written in trust

A life insurance policy written in trust pays out directly to your chosen beneficiaries rather than forming part of your estate. The proceeds are therefore not subject to IHT and can be used by your family to meet any tax bill that does arise, providing real financial security at a difficult time.

Inheritance tax and your property

Property is often the largest asset in an estate, and it’s a common source of concern for clients approaching or exceeding the IHT threshold.

Will my children pay inheritance tax on the family home?

If you leave your main home to your children or grandchildren, the RNRB can reduce or eliminate the IHT on that property. Combined with the NRB, a surviving spouse or civil partner may be able to pass on a property worth up to £1,000,000 to their children free of tax, provided all conditions are met. Making or updating your Will is the most straightforward way to ensure your wishes are clear and the relief is claimed correctly.

Inheritance tax on second homes and buy-to-let

Second properties, including buy-to-let investments, do not qualify for the RNRB. Their full market value will be included in your estate and subject to IHT above the available threshold. If you own additional property, early planning is particularly important.

Downsizing and the RNRB

If you’ve downsized or sold your home, you may still be able to claim the RNRB through the downsizing addition, provided certain conditions are met. We can advise you on whether the downsizing addition applies to your circumstances and help you take full advantage of the relief available to you.

Pensions and inheritance tax

Until recently, pension funds were a popular way to pass wealth to the next generation, as they generally fell outside the estate for IHT purposes. This is changing. From 6 April 2027, most unused pension funds and death benefits will be brought within the scope of IHT. Death in service benefits from registered pension schemes will be excluded from these changes.

If you have significant pension savings you intend to leave to your family, it’s important to review your estate plan ahead of this date.

Why choose Lyons Solicitors for inheritance tax advice?

Our Wills, trusts and probate solicitors have extensive experience helping individuals and families across Bristol, North and North East Somerset, and South Gloucestershire plan their estates effectively. We take the time to understand your full picture before recommending a strategy, and we explain everything in plain English, without jargon.

We handle Wills, trusts, and probate under one roof, so your estate planning can be joined up from the outset rather than pieced together later. We’re happy to meet you at any of our three offices, by video call, or by telephone. Home visits can also be arranged, and free parking is available at our Westbury-on-Trym and Chew Magna offices.

Frequently asked questions

What is the inheritance tax threshold in the UK for 2026/27?

The standard nil-rate band is £325,000 per person. If you qualify for the residence nil-rate band, your personal threshold rises to £500,000. Married couples and civil partners can combine their allowances, potentially passing on up to £1,000,000 tax-free, depending on the size and composition of the estate.

How much inheritance tax will my estate pay?

IHT is charged at 40% on the value of your estate above your available threshold. The exact amount depends on your estate’s total value, the reliefs and exemptions you’re able to use, and how your assets are structured. Speaking with one of our solicitors is the best way to get an accurate picture of your position.

What is the 7-year rule on gifts?

Gifts made more than seven years before your death are generally exempt from IHT. Gifts made within seven years may attract tax, but taper relief reduces the rate on a sliding scale for gifts made between three and seven years before death. The relief only applies where the total value of gifts exceeds your available nil-rate band.

Can I avoid inheritance tax by giving everything away?

Giving assets away can reduce your estate’s IHT liability, but there are important rules to bear in mind. If you give away an asset but continue to benefit from it, for example by gifting your home but continuing to live in it rent-free, it will still be treated as part of your estate. We can help you understand what counts as an effective gift for IHT purposes.

How are pensions affected by the 2027 inheritance tax changes?

From 6 April 2027, most unused pension funds and death benefits will be included within the value of your estate for IHT purposes. Death in service benefits from registered pension schemes are excluded. If you’re planning to use your pension as part of your legacy, we recommend reviewing your estate plan now so that you have time to consider your options.

Do I need a solicitor or an accountant for inheritance tax advice?

Both solicitors and accountants can assist with IHT planning, and their roles often complement each other. A solicitor is particularly valuable where your plans involve Wills, trusts, probate, or property transfers, as these require careful legal drafting. We work alongside financial advisers and accountants where appropriate to make sure your approach is joined up.

How much does inheritance tax advice cost at Lyons Solicitors?

We offer a free first consultation so you can discuss your situation without any initial cost. Following that, we’ll provide clear information about our fees before any work begins, so there are no surprises.

Get expert inheritance tax advice in Bristol today

Whether you’re looking to understand your estate’s IHT position for the first time or you want to review an existing plan in light of the upcoming pension changes, we’re here to help.

We offer a free first consultation to answer your questions and clearly outline your options.

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