Inheritance Tax Advice for High-Net-Worth Individuals
Inheritance tax planning isn’t just about financial protection—it’s about keeping control of your assets while ensuring your heirs don’t face unnecessary tax liabilities. Without the right strategy, HMRC could claim up to 40% of your estate, leaving your family or business partners with a significant financial burden.
High-net-worth individuals (HNWIs) often deal with complex asset portfolios, including property, business interests, and international holdings. With careful structuring, assets can be protected, tax liabilities reduced, and wealth efficiently transferred.
Inheritance Tax Planning Services for High-Net-Worth Individuals
Our inheritance tax planning services are designed for high-net-worth individuals (HNWIs), business owners, and investors who want to protect their wealth, minimise tax liabilities, and ensure a smooth transfer of assets.
We offer technical, structured, and tax-efficient strategies that align with UK tax regulations and estate planning requirements.
Trust Structuring and Estate Planning
Discretionary Trusts: Flexible trusts that allow assets to be managed and distributed at the discretion of trustees.
- IHT benefits: Assets in a discretionary trust are not part of the settlor’s estate after seven years.
- Protection from creditors and divorce settlements: Beneficiaries do not legally own the assets.
- Control over distributions: Trustees can allocate funds based on changing circumstances.
Bare Trusts: Assets retained in the name of a trustee but belong to the beneficiary.
- Ideal for gifting assets to children under 18.
- The beneficiary pays tax based on their tax band, potentially lowering tax liabilities.
Interest in Possession Trusts: Provides beneficiaries with assured income from the trust while preserving the capital for future generations.
- Commonly used for property investments where rental income is passed to a spouse, but the property itself is retained for children.
Gifting Strategies and Wealth Transfer
- £3,000 Annual Exemption: Gifts up to this amount per year are immediately tax-free.
- £250 Small Gift Exemption: Unlimited gifts to different individuals are tax-free if no other exemption is used.
- Potentially Exempt Transfers (PETs): Larger gifts become tax-free after seven years, with taper relief reducing tax on gifts given within three to seven years.
Effective for transferring property, cash, or business shares to heirs.
- Regular Gifts from Excess Income: If structured properly, gifts from surplus income (such as dividends or rental income) are immediately exempt from IHT, requiring meticulous documentation to meet HMRC compliance standards.
Business Relief and Corporate Tax Structuring
Reduces inheritance tax on trading business assets, including:
- Shares in a trading business
- Unquoted company shares
- Business property, including machinery and land used in the trade
Family Investment Companies (FICs): An alternative to trusts, FICs allow long-term control over wealth while providing:
- Corporate tax efficiency: Companies pay 25% corporation tax instead of 40% IHT.
- Shareholder structuring: Parents retain voting control, while children receive economic benefits.
- Dividends taxed at lower rates: Beneficiaries can receive income at lower tax rates than inheritance tax would impose.
Life Insurance and Tax Mitigation
- Covers expected inheritance tax liabilities.
- Ensures liquidity so beneficiaries don’t have to sell assets to pay HMRC.
- Premiums are structured to provide predictable, fixed costs.
International Inheritance Tax Planning
UK residents with foreign assets or non-domiciled individuals must plan for double taxation risks. Tax treaties and exemptions can be used to mitigate cross-border inheritance tax exposure.
- Offshore Trusts and Investment Structures: Certain offshore trusts remain outside UK IHT rules but require careful structuring to remain compliant. Incorrect offshore arrangements can trigger UK tax penalties, making professional guidance essential.
Example: An HNWI with £50 million in global assets could use a non-resident trust structure to prevent overseas assets from being subject to UK IHT.
Property and Real Estate Inheritance Tax Strategies
Homeowners passing property to direct descendants can claim an additional £175,000 tax-free allowance. Combined with the standard £325,000 nil-rate band, this increases the tax-free threshold to £500,000 per individual or £1 million for a married couple.
Structuring Property Investments for IHT Efficiency:
- Retaining property in a company can reduce inheritance tax exposure and improve tax efficiency.
- Using Business Property Relief (BPR) for furnished holiday lets (FHLs) and other qualifying rental businesses can provide additional tax benefits.
Charitable Giving and Philanthropic Tax Reliefs
- Reduces the overall inheritance tax rate from 40% to 36%.
- Structured donations allow estates to maximise IHT efficiency.
FAQs
If an estate exceeds £325,000, the excess is taxed at 40% unless reliefs such as the residence nil-rate band or Business Relief apply.
Gifts made within seven years of death may still be taxed, but taper relief can reduce liability.
Offshore structures can be beneficial but must comply with UK tax laws. Improper use may result in severe penalties and legal scrutiny.
Yes, but only if the policy is written in trust. Otherwise, the payout may form part of the taxable estate.
A trading business must meet strict criteria to qualify for 100% relief. Investment-focused businesses, such as buy-to-let portfolios, typically do not qualify.
Secure Your Wealth with Proactive Inheritance Tax Planning
High-net-worth individuals and business owners must take proactive steps to safeguard wealth for future generations. By using trusts, gifting strategies, corporate structures, and tax exemptions, it’s possible to reduce tax exposure while keeping control over assets.
Inheritance tax isn’t just about financial loss—it’s about ensuring heirs don’t face unnecessary burdens. Proactive planning today protects wealth tomorrow.
