Inheritance Tax and Estate Planning

Herrington Carmichael is a full service law firm offering legal advice to UK and international businesses as well as individuals and families.
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Inheritance Tax and Estate Planning

At Herrington Carmichael we receive many questions relating to the legal process on tax and inheritance – after years of property market growth, we are seeing more cases of clients who want to gain an understanding of the Inheritance Tax Reliefs and Exemptions with a little advice on income and capital gains tax.

Individuals currently have an Inheritance Tax free sum (known as the Nil Rate Band) of £325,000, and the value of their net Estate above this sum may be subject to Inheritance Tax at a rate of 40%.

Under current legislation there is also the concept of the Transferable Nil Rate Band. Married or Civil Partnered individuals benefit from the spouse exemption, allowing tax-free asset transfers during their lives or after death. The Transferable Nil Rate Band permits the transfer of any unused allowance to the surviving partner, potentially doubling the Nil Rate Band to £650,000 if both partners pass with full allowances.

The Residence Nil Rate Band, currently at £175,000, can further benefit an Estate, but strict criteria apply. To qualify, the property or Estate must pass to direct descendants. However, this allowance decreases by £1 for every £2 the Estate exceeds £2 million, becoming unavailable for Estates over £2.35 million (or £2.7 million with the Transferable Residence Nil Rate Band).

A Will plays a crucial role in managing inheritance tax by allowing an individual to outline how they want their assets distributed after their death. Through careful estate planning in a Will, one can potentially reduce the inheritance tax liability for their beneficiaries.

We are able to advise on tax planning matters as part of our Will drafting service, at other times we will give separate advice.

Inheritance tax relief and exemptions can significantly reduce the tax burden on estates passed down to beneficiaries. These are provisions designed to help individuals and families manage their inheritance tax liabilities.

Take a look at our list of Inheritance Tax Reliefs and Exemptions and brief description of the principal reliefs and exemptions from Inheritance Tax. It is not an exhaustive list and should not be relied upon without first obtaining professional advice.

  1. Spouses and Civil Partners
  2. Charities
  3. Nil Rate Band
  4. Transferable Nil Rate Band
  5. Chargeable Transfers
  6. Small Gifts
  7. Annual Exemption
  8. Regular Expenditure Out of Excess Income
  9. Business and Agricultural Property
  10. Shared Property
  11. Maintenance of a Dependant

As well as being recognised specialists in inheritance tax in the UK. In addition, we do have considerable knowledge of income and capital gains tax and often advise on these.

Income tax is levied on earnings like salaries, dividends, and rental income, while capital gains tax applies to profits from asset sales. They're crucial revenue sources for governments, funding public services. Income tax varies with earnings, while capital gains tax depends on the profit made from selling assets. Both have complexities in rates, exemptions, and impact investment decisions, making professional advice valuable for managing taxes effectively.

Key contact

Charlotte Drury-Woods PNG
Charlotte Drury-Woods
Partner, Head of Private Wealth & Inheritance

What our clients say about us

The Real Estate team at Herrington Carmichael were excellent in dealing with this transaction right from the initial negotiations. They delivered their expertise in a pragmatic and commercial way emphasising the importance of having a legal team with the relevant industry knowledge and experience in complex renewable energy and infrastructure agreements. They acted efficiently and responsively and maintained a professional approach throughout the transaction particularly when dealing with unexpected requirements and stringent timescales.

Liz Hailey has been my primary point of contact at Herrington Carmichael and has become a trusted adviser to me and my clients. Liz possesses unparalleled legal knowledge and offers a unique approach to issues, thinking outside the box to come up with solutions. The collaborative approach within the business ensures that we have access to a variety of different legal departments offering an end-to-end service. The communication has been a primary factor in my continuing use and recommendation of Liz and HC.

Rachel Duncan, Anna Svensson, Charlotte Keeper, and Jed Temple are working as a team with both extensive and developing skill sets to collectively deliver a valued leasehold acquisition and advisory service to our in-house team of property professionals. Trusted advice and guidance are always available and quick to respond.

A dedicated, commercially minded team at all levels, with direct communication to principals is a real benefit to us.

I deal with many law firms and in recent years I have noticed a 'shift' toward an 'over' emphasis on ensuring boxes are ticked rather than being solution-led. Jamie Lynch and his team struck the right balance and never forgot that the client actually wants the best outcome!

A strong real estate team with London experience in transactions while also located in the regions. Good communication and sufficient cover when anyone in the team is away from the business. Adapts to client requirements and maintains open communication throughout transactions.

Liz Hailey - huge depth of range, knowledge, and experience in the real estate sector. Liz has picked up our requirements very quickly and has accommodated these where needed. Liz explains things in a simple but knowledgeable manner, and we are confident she is acting in the best interests of her client at all times.

They are genuinely engaged and thoughtful people to work with through a variety of transactions. The key from my perspective is that all challenges are put into relevant context with thorough recommendations made.

The breadth of experience across a wide range of challenging assets is absolutely clear. Expectations and time scales are well managed proactively. Picking up the phone to discuss is of key value; thank you.

We have also greatly benefited from the excellent work of Usof Shah, Immigration Director, whose expertise has been instrumental in helping our members address critical skills shortages in the construction industry. Usof has provided clear, actionable guidance on immigration laws, empowering our members to legally employ skilled foreign workers and sustain their businesses. His commitment extends beyond traditional legal services - he has delivered live webinars and offered free advice to some of our SME members, which was highly valued and, in several cases, helped save their companies. This combination of deep legal expertise, accessibility, and genuine care for clients' success sets him apart from others in the field.

Throughout my UK career, I came across many solicitors and solicitor firms. But Herrington Carmichael is the best so far. Their quick response, wider knowledge, and straightforward decisions come with a very competitive advisory fee. I can easily recommend them, and I did. Their success rate for me is 100%. In a nutshell, they are brilliant.

The individual deals with my requirements and makes sure I fully understand what he is advising and what the best way to proceed is.

Responsive, commercial, and able to explain immigration requirements in clear, simple terms.

The individuals we work with stand out for being approachable, knowledgeable, and responsive. Usof Shah, in particular, has been extremely professional, helpful, and practical in his advice.

Usof Shah stands out for his strong combination of technical expertise, commercial awareness, and responsiveness. He is able to explain complex immigration matters in a clear and practical way while remaining highly approachable and solutions-oriented throughout the process. What differentiates him from competitors is the level of personal attention and ownership he brings to matters. He is proactive, detail-oriented, and demonstrates a strong understanding of the operational and business needs of his clients rather than approaching matters from a purely technical perspective. I have particularly valued his responsiveness, clear communication, and ability to manage matters efficiently under tight timelines. He consistently provides pragmatic advice and maintains a high level of professionalism, which creates a strong sense of confidence and reliability throughout the engagement.

Usof Shah and his team stood out for their professionalism, responsiveness, and clear communication.

Herrington Carmichael’s team stands out for its strong expertise in immigration matters, combined with a highly personalized and responsive service. Over the past few years, they supported me and three members of my family, managing each of our individual cases efficiently and professionally. Compared to other firms, they are notably more organized and responsive.

Dedicated family law team with a passion for the area and a strong commitment to client service. Technically excellent lawyers with good legal judgment. Pragmatic and solutions-focused, providing realistic advice enabling clients to make informed decisions from an early stage.

I have always been impressed with how strong the team's commitment is to client outcomes and how well they balance each other in pushing forward for an outcome while also exploring settlement.

Personalised service - understood requirements. Work lasted several years and through several partners and associates, but the practice was able to ensure a seamless handover of information. Billing was clearly supported.

Herrington Carmichael punches above its weight. For a relatively small firm, it provides excellent service for high-net-worth individuals.

Sarah Speed is an outstanding family lawyer who is a joy to work with. She is very bright as well as being a calm and reassuring presence for her clients. Her down-to-earth and pragmatic advice means that she is not distracted in a case from the issues that matter. She is no pushover, and her clients can rest easy in the knowledge that she will skillfully argue their case for them when necessary, but also find a compromise when contested litigation is not the best way forward for her client.

I am not familiar with the team, but rather with one of the partners, Sarah Speed. However, it seems to me that the breadth of work that the firm covers provides good cross-pollination of legal expertise across various sectors, which may be enormously helpful in some cases.

A lovely team. All very professional and, importantly, friendly.

Graeme Black comes with a host of experience delivered in a manner that is simple to understand. He is friendly, supportive, and a great asset to the firm.

They are extremely knowledgeable about their field and genuinely care about the clients. They are honest and transparent.

Stephen Baker is exceptionally well-experienced, has a steadfast, logical mind, and an incredible ability to pinpoint real issues.

Very knowledgeable team, highly client-focused and with generally quick turnaround of any requests. Very professional approach and very open and honest with their respective areas of expertise.

Stephen conducted complex and challenging litigation and responded to the demands of a demanding client with great patience, determination, and tactical astuteness, while also developing a strong and positive relationship with the other members of the legal team, including counsel. He is a seasoned and highly skilled litigator.

From the first person I spoke to, then to all of the team, they were all polite, precise, and knew exactly what service I was going to need.

Jed was brilliant and really compassionate about my tough situation. He was calming and reassuring when I was quite stressed about my situation. This alone was a real quality that helped me out and one that made him stand out. The whole team was brilliant, very clear on what needed to be done and what the process would look like.

I have now met several partners across a number of disciplines and find them all most accommodating. Mostly, we deal with the litigation team, who are very good, provide sound advice (even when it is not what you want to hear), and are personable and professional. The conveyancing team is also very efficient and seems to look to reserve costs where they can, which is very impressive. HC's billing is also good, quick, and easy to understand.

I have done a lot personally and with my firm over the years with Ed Jones, who is especially effective and with whom we have had a number of wins. He is also a very effective mediator. Jed Temple too has provided excellent advice, and Michelle Lambeth has also been helpful and accommodating.

The whole team was brilliant. They were great at listening and understanding my problem, with the main thing being reassuring about my situation. They explained clearly the different approaches to take and what the outcomes could be.

Friendly service with a clear understanding of what services are involved in a complex legal environment.

The personal touch made me feel like a normal person who made a mistake. They were always quick in responding to my emails and didn’t make me feel like just another case. They related to me in my scenario.

The team's strengths were being very knowledgeable and being able to explain to me the process we would go through with the possible outcomes.

We were very happy with our service. Being first-time buyers and brand new to the property world, Annari & Mary-Jayne relieved all of our worries and made our journey very stress-free and relatively easy. Thank you.

We received excellent support in reviewing and modifying our Wills to our latest needs. The communication has always been straightforward and very effective and we achieved the objectives we set at the beginning of the process. Strong expertise and legal knowledge have been key to the successful completion.

It was a very straightforward process & Charlotte explained everything clearly to us in a very friendly way & answered any queries we had. It was a pleasure to have her deal with this matter, and I would certainly come to your firm of solicitors on that basis. Thank you so much.

Paul provided calm, helpful, constructive and thorough advice on my matter and I will be in touch again to progress.

Aadil has been representing my son through a very challenging child custody/recovery case. His help and knowledge has been fantastic. He went above and beyond working on his day off too make sure court papers were delivered on time. I wouldn't hesitate to recommend Aadil.

I just wanted to write a huge thank you for all your help and support during my recent divorce proceedings There were times when it seemed things would never get resolved but thankfully with your guidance everything went relatively smoothly in the end.

Annari is an excellent Solicitor. We have always used her services for all of our property conveyancing jobs. She is a valuable asset to your company.

We had the pleasure of working with Annari on buying our very first house. We would like to take this opportunity to let you know how efficient Annari was throughout the entire process. Annari really helped to make buying our first home an easy process! She absolutely went above and beyond her call of duty.

The service we received was exceptional. We were always updated and Annari would answer any questions I had immediately. Keep doing what you do Annari. Thank you so much for everything, and Amy too.

Thanks again, we’ve always felt in good hands. It is for this reason we’d highly recommend Herrington Carmichael and especially Annari.

Annari is an excellent Solicitor. We have always used her services for all of our property conveyancing jobs. She is a valuable asset to your company.

We had the pleasure of working with Annari on buying our very first house. We would like to take this opportunity to let you know how efficient Annari was throughout the enitre process. Annari really helped to make buying our first home an easy process! She absolutely went above and beyond her call of duty.

Both Holly Bray & Jessica Brooke were fantastic from start to finish on the purchase of my new build property. Nothing was an issues for them and I didn’t need to chase them for anything at all. I was kept well informed all the way through the process to completion and everything was dealt with in a very pleasant and professional manner. I would happily recommend Herrington Carmichael to anyone looking for a conveyancer for the purchase of their property. 5 stars.

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Meet our experts

Dedicated professionals ready to assist you.

Charlotte Drury-Woods PNG
Partner, Head of Private Wealth & Inheritance
Graeme Black PNG
Partner
Nicole Miller PNG
Legal Director
Mike Pollard PNG
Legal Director
Steph Collins PNG
Senior CILEX Lawyer
Maisie Williams PNG
Solicitor
Sarah-Jervis-PNG
Solicitor
Jessica-McDonald PNG
Solicitor
Harriet Page PNG
Solicitor
Kayleigh Hill PNG
Apprentice Solicitor
Kate Hooper PNG
Senior Apprentice Solicitor
Emily Southwood PNG
Trainee Solicitor
hc_team-placeholder
Paralegal
mellisa v2
Paralegal

Frequently Asked Questions

Find answers to your most pressing questions about our services and processes.

  • Explain what reliefs and exemptions are available to you and how to access these.
  • Warn you of the many traps contained in the tax legislation
  • Help you to organise your affairs in a tax efficient manner
  • Advise on a tax efficient structure for your Will
  • When appropriate refer you to third party investment advisers or liaise with your own advisers over the implementation of advice.
  • Advise and assist in the preparation and implementation of Trusts when these are considered beneficial.
  1. Life Policies / Pensions / Death in Service Benefits – Take time to review your policies and options as there is potential to pass them to beneficiaries outside of your estate.
  2. Use allowances if you have excess funds – You do have individual allowances available to make gifts before Inheritance Tax is payable.
  3. Consider Charitable Gifts – In your lifetime or in your Will – In certain circumstances, where a portion of your estate is left to charity you can qualify for a reduced rate of Inheritance Tax.
  4. Take regular advice from a STEP qualified advisor – We always recommend our clients review their Wills every 5 years or whenever there is a significant life event; marriage, divorce, having children, a house purchase or anything similar.
  5. Understand NRB (Nil Rate Band), TNRB (Transferable Nil Rate Band) and RNRB (Residence Nil Rate Band) Understand your allowances for inheritance tax and the different levels of Nil Rate Band.
  6. Communication – With your family, executors and beneficiaries – It is important to be open with your family and your intentions with your estate if you wish. This can help with family planning for wealth.
  7. Make a Will – Don’t put it off! Plan for the future and have peace of mind.
  8. Don’t be scared of Trusts – Trusts can really be your friend when it comes to planning during your lifetime or in your Will. Some forms of Trust really are very simple and low maintenance and can fit your wishes to benefit your loved ones.
  9. Make gifts from excess income – If you have an excess left, after your receive your income, and have plenty of provision some gifts made from excess income are exempt from Inheritance Tax. Take advice and keep records.
  10. Last of all … spend it !

This reflects the law at the date of publication in 2022 and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to a particular matter.

Wills
One major way in which you can plan for your future is through your Will. You may not have a Will, it might be out of date or fail to take advantage of tax planning.

If you are married or in a civil partnership, you are able to leave your entire estate to your spouse tax free. On the death of the second spouse, their estate will be able to claim their spouse’s unused nil rate band allowances, meaning they could potentially give away up to £1m tax free.

Furthermore, if you intend to leave a certain amount of your estate to charity, your estate could benefit from a lower rate of IHT (36%).

Trusts
Trusts can be set up either in your lifetime or by your Will.

Trusts can have the benefit of taking the value of the assets that you put into the trust out of your estate, whilst enabling you to maintain some control over the assets.

Other tax charges may be incurred so advice should be sought before entering into any trust arrangements.

Gifts
If you have amassed a large amount of savings during your lifetime, you may come to a point where you have more capital than you reasonably need. In order to reduce the value of your estate when you die, you can take advantage of a number of exemptions relating to gifting.

Each tax year, you are able to give away £3,000 free of tax without having to survive this gift by any length of time. You can carry forward a maximum of one year’s allowance if this has not already been used. These gifts should come from savings, rather than income.

You can make larger gifts (over £3,000), but for these to be left out of your estate when you die, you will need to survive by 7 years from the date of the gift. If you were to die within the 7 years, the exemption may be tapered depending on how long you survived by.

Smaller gifts of £250 can be made to as many different individuals as you wish per tax year. These gifts cannot be made to the same person who received the £3,000.

If a child or grandchild is getting married, you are able to make a tax free gift of £5,000 or £2,500 respectively. For any other person, if you are feeling generous, it is £1,000.

Gifts to charities and political parties are exempt for IHT.

You may be receiving multiple pensions, or be earning a decent wage and have excess income. If your income exceeds your outgoings, you are able to make regular gifts out of income free of tax. After your death, your executors will need to show that the gifts qualify for this exemption. Keeping proper records is therefore vital if your executors are to successfully claim this exemption.

Reliefs
If there are certain types of asset in your estate, relief may apply to reduce the amount of IHT payable on those assets, sometimes to nil.

Business owners, farm owners or those with agricultural land may benefit from relief from IHT if certain conditions are met.

You can also consider investing in certain types of companies or assets which attract tax relief in order to reduce your IHT liability.

Gifts with reservation of benefit
Something we are frequently asked is if you can hand over your house to your children now to avoid paying care fees and reduce the value of your estate.

Unfortunately this will not work for IHT purposes. If you continue to live in the house after you have transferred it to someone else, this will be a “gift with reservation of benefit” and will be included in valuing your estate for IHT purposes on your death.

There are certain ways in which you may be able to transfer your property in order to reduce your IHT liability and our Private Client team can advise you on this.

This reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to a particular matter.

There is no time like the present and when Inheritance Tax (IHT) can run into hundreds of thousands of pounds when you die, it is better to plan ahead. By undertaking tax planning in your lifetime, you could potentially significantly reduce the amount of IHT payable on your death and in some cases could pay no IHT at all.