Rising inflation pulls more estates into the Inheritance Tax net

Why early estate planning is now essential

With the nil-rate band for inheritance tax (IHT) frozen at £325,000 since 2009, more and more families across the UK are being drawn into the IHT net as inflation continues to push up property values and asset portfolios. What was once considered a tax on the wealthy is now catching the estates of individuals who, by many standards, would consider themselves firmly middle-income.

The increase in IHT receipts reported by HMRC reflects a significant shift: estates that would not previously have been taxable are now becoming liable purely due to the passage of time and rising asset values, particularly in the South-East of England and other property-inflated regions.

Why you should seek legal advice now

Inheritance tax planning is no longer optional for those who wish to preserve the value of their estate for the next generation. It is essential that clients take early, informed advice from a solicitor with experience in estate planning to ensure their affairs are arranged efficiently and lawfully.

A solicitor can assist with:

• Assessing the current value of the estate and calculating likely tax liabilities based on current thresholds and allowances
• Ensuring full use of available reliefs, such as the residence nil-rate band (currently £175,000) and spouse or civil partner exemptions
• Establishing appropriate will structures, including life interest or discretionary trusts, where suitable
• Considering lifetime gifting strategies, including use of the annual exemption and Potentially Exempt Transfers (PETs)
• Advising on liquidity within the estate to prevent forced sales to meet tax liabilities
• Addressing cross-border assets, especially in jurisdictions affected by the EU Succession Regulation, where forced heirship rules may apply

Why DIY planning is inadvisable

With the rise of online will-writing platforms and non-specialist advisers, it may be tempting to seek a low-cost solution. However, estate planning is inherently complex, and incorrect or incomplete arrangements can create significant risk.

Only a qualified solicitor can ensure that estate planning:

• Complies with the Inheritance Tax Act 1984, Finance Acts, and associated HMRC practice
• Reflects the client’s true testamentary intentions and protects vulnerable or minor beneficiaries
• Includes appropriate records and advice to withstand HMRC scrutiny, particularly if lifetime gifts or business property relief are involved
• Is regularly reviewed to reflect changes in law, family circumstances, and asset values

Practical consequences of inaction

Failure to plan effectively can result in:

• Up to 40% of the estate being lost to IHT unnecessarily
• Unanticipated tax liabilities for beneficiaries
• Delays in probate and forced sale of property or investments
• Increased stress and cost for the executors and family during administration

Final thoughts

With the nil-rate band frozen and asset values rising, the scope for proactive planning is narrowing. Clients are strongly advised to take early legal advice to mitigate future tax exposure and ensure their estate is passed on in accordance with their wishes.

At Furley Page, we provide comprehensive, tailored advice on all aspects of wills, trusts, and estate planning. Whether you wish to update an existing Will, explore trust options, prepare lasting powers of attorney or undertake full estate restructuring, our team is here to support you.

Contact Associate, Francesca Hayward, on 01227 763939 to arrange a confidential consultation.