When do you actually need inheritance tax advice?

Most people do not need a full inheritance tax review. If your estate is modest, your affairs are straightforward, and your family is unlikely to face a significant tax bill, a basic will and some clear record-keeping may be enough.

But a meaningful number of families do need specialist input, and many of them do not realise it until it is too late to take the most effective action.

Your estate is above, or close to, the nil-rate band

The inheritance tax nil-rate band is £325,000. If your estate, including property, savings, investments, and personal possessions, is above or approaching this threshold, inheritance tax may be owed when you die.

If you are leaving your home to your children or grandchildren and your estate including that property is worth more than £500,000, the residence nil-rate band of £175,000 may also apply. But it has conditions, and not all estates qualify automatically.

Married couples and civil partners can combine thresholds, potentially sheltering up to £1 million from inheritance tax. But this only works if the first estate is structured correctly and the survivor does not inadvertently use the allowance in a way that reduces what is transferred.

You have a pension worth over £100,000

From April 2027, most unused pension funds are expected to be included in your estate for inheritance tax. If you have a SIPP or personal pension with a significant balance that you were planning to pass on, this changes your planning significantly.

Anyone with a combined estate and pension above the relevant thresholds should take advice before April 2027. The options available are wider the earlier you act.

You own a business or shares in one

Business Property Relief can exempt qualifying business assets from inheritance tax at either 50% or 100%, depending on the nature of the asset. But the relief does not apply automatically, and there are conditions around how the business is structured and how long you have held the asset.

If you own a trading business, shares in an unlisted company, or agricultural land and property, specialist advice is worth getting. The relief can be substantial, but it requires careful structuring.

You have assets in another country

UK inheritance tax applies to your worldwide assets if you are domiciled in the UK. If you own property abroad, have overseas investments, or have lived in multiple countries, the interaction of UK and foreign tax rules can be complex.

Double taxation treaties exist between the UK and some countries, but they do not cover all situations. A specialist who understands cross-border estates is worth consulting if you have significant overseas assets.

Your family situation is not straightforward

Blended families, stepchildren, cohabiting partners, and estranged family members all add complexity. Inheritance tax thresholds and reliefs are built around a relatively traditional model of family structure, and they do not always map cleanly onto real lives.

• Cohabiting partners do not benefit from the spousal exemption
• Stepchildren are treated differently to biological children for some reliefs
• Gifts between former spouses may not receive the treatment you expect
• Children from a previous relationship may have competing claims on the estate

When you probably do not need specialist advice

If your estate is clearly well below the thresholds, your family situation is simple, and you have no unusual assets, a good solicitor who handles wills should be enough. You do not necessarily need a dedicated IHT specialist.

The test is really whether the potential tax saving from specialist advice is likely to outweigh the cost of getting it. For many families with estates over £500,000, it will.

Devonshire Wealth helps UK families find estate planning advisers matched to their specific situation. Visit our inheritance tax advice page to find a specialist who can give you an honest assessment of where you stand.