Inheritance Tax Planning: Be Proactive

Inheritance Tax (IHT) is increasingly becoming a significant concern for many families across the UK. Recent data from the government has shown a notable rise in tax receipts from IHT, underscoring the importance of effective financial planning. At Clarity Wealth Limited, we believe that proactive IHT planning can help mitigate these liabilities, ensuring that more of your hard-earned wealth is preserved for future generations.

Rising IHT Receipts: A Growing Concern

Recent figures reveal that IHT receipts grew to an unprecedented £7.5 billion between April 2023 and March 2024, according to HM Revenue and Customs (HMRC)​ (FT Adviser)​. This significant increase of £400 million compared to the previous year highlights the pressing need for effective IHT planning. Factors such as rising property values and the freezing of tax thresholds contribute to more estates being caught in the IHT net.

Mitigating IHT Liabilities Through Financial Planning

At Clarity Wealth Limited, we specialise in creating tailored financial strategies to help mitigate IHT liabilities. Here are some key approaches we use:

1. Utilizing Annual Exemptions and Reliefs

Every individual can take advantage of certain annual exemptions and reliefs to reduce their IHT burden. For example, the annual gift allowance allows you to give away up to £3,000 each year without it being added to your estate. Additionally, gifts made to charities, political parties, and for national purposes are exempt from IHT.

2. Making Use of the Nil Rate Band and Residence Nil Rate Band

The nil rate band (NRB) allows the first £325,000 of an estate to be exempt from IHT. For married couples and civil partners, any unused NRB can be transferred to the surviving partner, potentially doubling the exempt amount to £650,000. For the 2023/24 tax year, the NRB remains frozen at £325,000. The residence nil rate band (RNRB) provides an additional allowance for those passing on a family home, starting at £175,000 per individual. Combined, a married couple can potentially shield up to £1 million from IHT when passing on their main residence to direct descendants.

3. Setting Up Trusts

Trusts are a powerful tool for managing IHT liabilities. By placing assets into a trust, you can remove them from your estate, thus reducing the taxable amount. Trusts also offer flexibility and control over how your assets are distributed to beneficiaries.

4. Lifetime Gifts and Potentially Exempt Transfers (PETs)

Gifting assets during your lifetime can significantly reduce the value of your estate. If you survive for seven years after making a gift, it becomes exempt from IHT. This strategy requires careful planning and consideration of your financial needs, but it can be highly effective in minimizing IHT.

5. Business Relief and Agricultural Relief

For those with business or agricultural assets, specific reliefs can reduce the IHT liability on these assets. Business Relief can offer up to 100% exemption for qualifying business assets, while Agricultural Relief can provide similar benefits for qualifying agricultural property.

Why Clarity Wealth Limited?

At Clarity Wealth Limited, we understand that every client’s situation is unique. Our team of experienced financial advisers is dedicated to providing personalized IHT planning strategies that align with your specific needs and goals. By staying informed about the latest tax laws and utilizing a range of financial tools, we help ensure that your wealth is protected for future generations.


The rising IHT receipts underscore the importance of proactive planning. Without it, many families could face substantial tax liabilities, reducing the amount passed on to loved ones. At Clarity Wealth Limited, we are committed to helping you navigate these complexities with expert advice and tailored solutions. Contact us today to learn more about how we can assist you in mitigating your IHT liabilities and securing your financial legacy.


  1. FTAdviser. (2024). “IHT receipts increase to unprecedented £7.5bn”​ (FT Adviser)​.
  2. HM Revenue & Customs. (2023). Inheritance Tax receipts statistics.
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