Delaying estate planning could cost more than you think

12 August 2026

Having spent a lifetime building wealth, the last thing you want is for a large chunk to disappear in Inheritance Tax (IHT). 

And yet, even with some level of awareness of the erosive nature of IHT, many people still delay putting plans in place to ensure more of their wealth finds its way to the next generation.

Research published by Today’s Wills and Probate shows that prevaricating over estate planning could cost Britain’s wealthiest families £12.3 billion in “preventable” IHT.

Modelling by the Centre for Economics and Business Research found that wealthy households that started estate planning at age 50 and made full use of appropriate tax-saving strategies could pass on an average of £397,000 more to their beneficiaries than those who didn’t act until age 70.

Have you started taking steps to protect your estate from the erosive effect of Inheritance Tax?

On average, people in the UK think estate planning should start at around age 45. 

But planners report that, typically, clients don’t begin estate planning until they’re about 61.

Drilling down to the detail, Today’s Wills and Probate reports that 86% of people aged 45 to 49 had done nothing about estate planning. And 70% of 50-somethings were also yet to engage.

If you’re yet to start thinking about your estate plan, there’s no time like the present

If the idea of £12.3 billion unnecessarily going to HMRC in IHT receipts isn’t motivation enough to prompt you to act, rising asset values combined with unused pension savings (which will come into scope for IHT from 6 April 2027) may increase the chance that your estate will be more affected by IHT than you may think.

Read more: How proposed Inheritance Tax rule changes on pension wealth could affect your estate plan

IHT is charged at 40% on any portion of your estate that exceeds the following thresholds: 

• The nil-rate band of £325,000 (2026/27), which is currently frozen until April 2031.
• The residence nil-rate band, worth £175,000 per person (2026/27) – also frozen until 2031. This reduces by £1 for every £2 by which the estate exceeds £2 million.

Planning as a couple could allow you to pass on up to £1 million free of IHT.

However, without careful planning, a significant portion of your estate could be lost to HMRC unnecessarily, leaving your beneficiaries with significantly less than you might wish.

5 estate planning strategies to help ensure you leave the lasting legacy you’d like

There are multiple strategies that could help ensure more of your hard-earned wealth passes to the people you care about. Here are just a few that may be right for you and your family.

1. Make the most of your annual gifting allowances

Each year, every individual can gift up to £3,000. You can carry any unused allowance to the next tax year, but you can only carry it forward one year. For example, if you’re planning as a couple and neither of you used last year’s allowance, together you could gift up to £12,000 free of IHT.

Wedding gifts can also be made free of IHT. You can gift up to:

• £5,000 to children and stepchildren
• £2,500 to grandchildren 
• £1,000 to any other friend or relative.

On top of these allowances, you can also give as many small cash gifts as you like (up to £250). While this excludes anyone who’s benefited from another gifting allowance in the same year, you can give cash gifts for birthdays and Christmas.

2. Gift from surplus income

If you have surplus income, you’re able to gift it free of IHT, but there are three strict conditions:

• The gift must be made out of income – not from capital.
• The gift must form part of your normal expenditure, meaning the same value must be gifted on a regular basis – be that weekly, monthly, or quarterly.
• You must have enough income to maintain your usual standard of living.

To ensure regular gifts remain free of IHT, it’s important to keep accurate records, as your executors may need to share the information with HMRC.

3. Leave something to charity

Gifting to charity can reduce the amount of IHT you pay in two ways. First, it can reduce the value of your estate, meaning that less IHT is due. And second, gifting at least 10% of the net value of your estate to charity reduces the rate of IHT payable from 40% to 36%.

4. Make a potentially exempt transfer

A potentially exempt transfer (PET) allows you to gift as much as you’d like. While it isn’t automatically exempt, the gift becomes free of IHT as long as you survive seven years or more after making it.

If you die within seven years of making the gift, it becomes a chargeable transfer, and some tax may be payable. The amount of tax will depend on several factors, including the total value of gifts and how long after making the gift you pass away.

Rather than reducing the value transferred, taper relief applied to PETs reduces the tax payable as a consequence of that transfer. 

Also, taper relief only applies to gifts in excess of the nil-rate band. If no tax is payable on the transfer because it does not exceed the nil-rate band (after cumulation), there can be no relief. 

5. Set up trusts

Used appropriately, trust structures allow you the option to remove assets from your estate, reducing any IHT that may be payable. 

Different trusts suit different goals, and while using one won’t entirely eliminate potential tax charges, set up correctly, they can allow you more scope to ensure more of your wealth reaches your beneficiaries as and when you wish.

To find out whether trusts might be helpful for you and your family, please get in touch.

Get in touch

We’ll help you structure your estate in the most tax-efficient way.

To find out more about how to ensure more of your wealth passes to the people you care about, please get in touch.

Email [email protected] or call us on 0161 8080200.

Please note

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor. 

The Financial Conduct Authority does not regulate estate planning, trusts, or tax advice.