Inheritance Tax planning: when did you last review your estate plan?

Reviewing lifetime gifting arrangements

For many individuals, reviewing lifetime gifting arrangements is a sensible starting point.

Gifts to individuals are generally treated as Potentially Exempt Transfers (PETs) and fall outside the donor’s estate if they survive seven years. Where death occurs within seven years, some or all the value may remain chargeable to IHT. If the gift exceeds the available nil-rate band, taper relief can reduce the tax payable after three years, with the effective rate reducing on a sliding scale and falling to just 8% where death occurs between six and seven years after the gift.

Individuals should also ensure they are making full use of available exemptions, including the £3,000 annual exemption, gifts of up to £250 per recipient, gifts on marriage or civil partnership and regular gifts made from surplus income. Equally important is avoiding the “gift with reservation of benefit” rules. Where an individual gives away an asset but continues to enjoy a benefit from it, such as gifting a property to children whilst continuing to occupy it rent free, the asset will generally remain within their taxable estate regardless of how long they survive after making the gift.

Understanding the new Business Property Relief rules

Business owners and investors should also revisit their BPR planning in light of the substantial reforms that took effect in April 2026.

From 6 April 2026, a new combined £2.5 million allowance will apply to property qualifying for 100% Agricultural Property Relief (APR) and BPR. Qualifying assets within this allowance will continue to benefit from 100% relief, whilst qualifying value above £2.5 million will generally receive relief at 50%. The allowance will also become transferable between spouses and civil partners, meaning a married couple could potentially benefit from up to £5 million of combined 100% APR and BPR allowances. Together with the existing nil-rate bands, this could allow up to £5.65 million to pass free of IHT.

Importantly, AIM-listed shares will no longer qualify for 100% relief from April 2026 and will instead attract relief at 50% irrespective of value. The new £2.5 million allowance will not apply to these holdings. Owners of trading businesses should therefore consider whether their current asset mix remains appropriate for their succession objectives.

Succession planning before a business sale

For business owners considering a future sale, there may be opportunities to undertake succession planning before a transaction takes place.

Transferring shares in a qualifying trading company into a discretionary trust before a sale can be highly effective. Provided the settlors are excluded from benefiting and survive seven years following the transfer (taper rules may apply after 3 years), the resulting cash proceeds can sit outside their estates for IHT purposes while remaining available for children and future generations through the trust structure.

Family Investment Companies and future wealth

Families with investment wealth may also wish to consider Family Investment Companies (FICs).

Typically, parents retain control of the company while future growth in value is directed towards children or family trusts through carefully structured shareholdings.

Estate planning should evolve over time

Estate planning should never be viewed as a one-off exercise. Family circumstances change, assets evolve and legislation continues to develop. Regular reviews can help ensure that existing arrangements remain effective and that opportunities are not missed.

The combination of changing family circumstances and the new APR and BPR reforms means that tax-efficient arrangements may now require updating.

A review of gifting strategies, business assets, trust arrangements and succession structures can help ensure that wealth is passed to future generations as efficiently as possible, while continuing to reflect a family’s wider objectives and circumstances.