The best inheritance tax plan in the world is simple… spend your money and enjoy it.
The next best plan is to give your money to people and causes you care about.
These work better than any fancy scheme, every time.
Beyond these basic truths lies the complex world of inheritance tax planning. In the UK, estates worth more than the tax-free allowances face a 40% tax on the extra amount – which can seem scary.
We often hear clients say, “I’ve paid enough tax during my life. I don’t want to pay more after I die.” That makes sense. But when we dig deeper, the worry isn’t really about the tax – it’s about leaving more for their children.
Let’s look at some simple numbers for a married couple:
A couple can pass on about £1 million tax-free. So an estate worth £2M might pay around £400,000 in tax, leaving £1.6M for the family.
An estate worth £5M would pay a bigger tax bill of about £1.6M, but would still leave £3.4M for the family.
The bigger estate pays four times more tax – but leaves more than twice as much money for the family.
This change in thinking matters. Instead of just trying to cut the tax bill, look at the final result. If your wealth grows – even knowing that 40% of the growth above the tax-free amount goes to HMRC – everyone still wins. Your children get more, and yes, the tax collector does too.
We know that dealing with inheritance tax can be hard for families who need to pay HMRC before probate is granted. This is a separate issue from tax planning itself. We can be there for your family to help them navigate this process when the time comes.
So enjoy your wealth and give to others during your life. But for what’s left, the focus shouldn’t be on avoiding tax at the expense of growth, but on building wealth that helps both your family and society.
Sometimes the most surprising answer is also the most sensible: let your money grow, even if it means more tax, because in the end, the numbers work out better for everyone.
If you’d like to have a chat with us about your inheritance planning, you can get in touch with us here.
