Inheritance tax (IHT) is a tax on the estate of someone who’s died. It’s controversial and is considered to be the most unfair of all UK taxes, according to a 2015 YouGov survey.

Which in itself is a bit unfair – because there are ways to minimise it or avoid it completely. This post gives some tips on how to do that.

  • As a general rule, there’s normally no inheritance tax to pay if the value of your estate is below £325,000 (the IHT threshold).
  • There’s also no IHT liability if you leave everything to your spouse or civil partner.
  • You can reduce the value of your estate by giving away gifts. For example, you can give up to £3,000 worth of gifts (your ‘annual exemption’) in any tax year; and any unused part can be carried forward to the next tax year. You can also give up to £5,000 as a wedding gift to your child, or £2,500 to a grandchild. And you can give small gifts of up to £250 in any tax year to as many people as you want.
  • As well as that, you can make regular contributions out of your income to family members – as long as it doesn’t affect your standard of living.
  • In addition, under the 7-year rule, there’s no inheritance tax to pay on one-off gifts or assets you give away – provided you survive for 7 years after making the gift. If you die before 7 years, there’s a sliding scale of tax to pay.
  • You can also put money into a suitable trust, which means that it’s no longer part of your estate. This can be a very effective way of reducing your IHT liabilities. The rules around trusts are complicated – but we can help you with that.

Many people believe that inheritance tax is unfair, but – with the right planning – there are legitimate ways to reduce what has to be paid.

Here at Johnston Kennedy, we can help you to optimise your estate planning and minimise your inheritance tax.


For more information, call us on +44 (0) 28 9045 6333 or


This blog post provides general information only and may not apply to your particular circumstances.