At Pearl Lemon Accountants, we specialize in helping individuals, families, and business owners manage the often-complex world of inheritance tax (IHT). With UK inheritance tax rates hitting as high as 40% on estates over £325,000, a solid plan isn’t just a luxury—it’s a necessity.
We don’t believe in generic solutions. Instead, we get into the specifics of your estate, your business, and your family’s unique needs to create a detailed plan that works for you. From reducing tax liabilities through effective gifting strategies to using trust structures to protect assets, we take the burden off your shoulders.
Inheritance Tax in the UK: What You Need to Know
Here in the UK, inheritance tax is one of the most misunderstood taxes. It applies to the value of everything you own when you pass away—your home, savings, business assets, and even some gifts made during your lifetime.
But did you know that proper planning can dramatically reduce how much tax your estate pays? For example, by combining the nil-rate band (£325,000) with the residence nil-rate band (£175,000), a couple can shield up to £1 million from IHT when leaving their home to direct descendants.
This isn’t about exploiting loopholes—it’s about knowing your options. Without planning, you could leave your loved ones with hefty tax bills and unnecessary stress.
Inheritance Tax Services by Pearl Lemon Accountants
At Pearl Lemon Accountants, we provide a detailed range of services to help you manage your inheritance tax (IHT) obligations effectively. Our services are designed to address every aspect of IHT planning, from straightforward solutions to complex cases involving large estates, family businesses, and international assets:
Inheritance Tax Planning and Advisory
We work closely with you to create a long-term inheritance tax plan that preserves your wealth and reduces tax liabilities.
- Assessing your current estate to identify tax liabilities and opportunities.
- Structuring plans to utilize the nil-rate band, residence nil-rate band, and other available allowances.
- Providing actionable advice on gifting strategies, trusts, and asset distribution.
Trust Establishment and Management
Trusts are a key tool in estate planning, offering flexibility and security for your assets. We guide you through the setup and management process:
- Recommending the best type of trust for your needs, such as Discretionary Trusts, Bare Trusts, or Interest in Possession Trusts.
- Ensuring trusts are structured to minimize inheritance tax and other charges.
- Managing trustee responsibilities to ensure assets are distributed according to your wishes..
Gifting Strategies
Gifting assets during your lifetime can reduce the taxable value of your estate, but it requires precise planning:
- Using annual exemptions and the 7-Year Rule to optimize gifting.
- Advising on Potentially Exempt Transfers (PETs) and lifetime gift allowances.
- Helping you make tax-efficient gifts without compromising your financial stability.
Business Property Relief (BPR) Optimisation
If you own a business, you may qualify for Business Property Relief, which can reduce IHT on qualifying assets by up to 100%. We help you:
- Identify eligible business assets, such as shares in unlisted companies or partnership interests.
- Restructure your business to maximize relief eligibility.
- Prepare succession plans that protect your enterprise and ensure a smooth transitio
Inheritance Tax Services
Meeting HMRC requirements is essential to avoid penalties and ensure your estate is settled efficiently. Our services include:
- Preparing and submitting accurate IHT returns.
- Ensuring all tax filings adhere to HMRC guidelines.
- Handling correspondence with HMRC on your behalf, including audits or disputes.
International and Cross-Border Inheritance Tax Services
For clients with international assets or family members abroad, we provide customized solutions for managing cross-border IHT complexities:
- Advising on UK IHT liabilities for non-domiciled individuals.
- Managing international estate planning and dual-taxation agreements.
- Ensuring alignment with both UK and foreign inheritance tax laws.
Life Insurance and IHT Planning
Life insurance can play a crucial role in covering potential IHT liabilities. Our services include:
- Advising on policies written in trust to keep payouts outside the taxable estate.
- Calculating potential liabilities and recommending appropriate coverage levels.
Succession Planning
Effective succession planning ensures your family business or assets are passed on seamlessly:
- Drafting shareholder agreements and family constitutions to outline succession rules.
- Balancing business ownership with estate distribution to ensure fairness.
- Preparing heirs and successors to take on their roles.
Pension Inheritance Tax Services
Pensions are typically exempt from IHT, but improper planning can create unintended liabilities:
- Reviewing your pension nominations to ensure alignment with UK laws.
- Advising on pension withdrawal strategies to reduce tax exposure.
- Ensuring beneficiaries receive pension payouts efficientl
Strategic Solutions for Inheritance Tax Planning
Our approach to inheritance tax isn’t theoretical—it’s practical, measurable, and designed to give you control.
Trusts: Securing Your Assets for Generations
Trusts are a cornerstone of UK estate planning, and we know how to set them up for maximum efficiency. For instance, a Discretionary Trust gives you flexibility over how assets are distributed. It’s an excellent choice if you want to ensure long-term benefits for younger generations without burdening them with taxes early on.
Gifting Without Getting Caught Out
Making gifts during your lifetime can significantly reduce the size of your taxable estate—but only if done correctly. The 7-Year Rule is critical here. Gifts are exempt from IHT if you live for seven years after giving them, but any within this timeframe may incur tax.
Business Property Relief (BPR): A Lifeline for Entrepreneurs
For business owners, passing on a company can trigger massive tax implications. With Business Property Relief (BPR), certain business assets can qualify for up to 100% relief, ensuring that your enterprise remains a family legacy rather than a tax liability.
How We Work with You
At Pearl Lemon Accountants, we don’t just offer advice—we partner with you to take action.
We’ll review every aspect of your estate, from family homes to international holdings, identifying areas where tax liabilities can be reduced. We take pride in offering services that are as thorough as they are straightforward. No jargon. No guesswork.
Here’s What You Can Expect
- Personalized Reviews: We start by analyzing your estate and identifying reliefs like Residence Nil-Rate Band and Agricultural Property Relief.
- Holistic Planning: Whether it’s setting up trusts or advising on long-term gifting strategies, we’ll guide you every step of the way.
- Accurate Reporting: We handle all reporting requirements with accuracy, ensuring your estate is managed efficiently and without delays.
FAQs About Inheritance Tax in the UK
Taper relief reduces the inheritance tax on gifts made between three and seven years before death. The tax liability reduces incrementally—from 40% at three years to 8% by year seven.
While trusts are excellent tools for reducing IHT, they’re not entirely exempt. Certain charges, like periodic (every 10 years) and exit charges, may apply depending on the trust type and value.
Yes, if written into trust. This keeps the payout outside your estate, providing funds to cover any IHT liability without increasing the taxable estate value.
Assets like shares in unlisted companies, partnerships, and properties used exclusively for business purposes may qualify for BPR. Each case requires a detailed assessment to ensure eligibility.
UK-domiciled individuals pay IHT on their worldwide assets, but non-domiciled individuals are only taxed on UK-based holdings. Careful planning is essential for anyone with international interests.
Let’s Secure Your Legacy Today
Don’t leave your inheritance tax planning to chance. Speak with one of our specialists and get actionable solutions to protect your wealth, your business, and your family’s future. Arrange a strategy session with Pearl Lemon Accountants and start planning with confidence.
