{"id":23118,"date":"2025-12-16T12:21:31","date_gmt":"2025-12-16T12:21:31","guid":{"rendered":"https:\/\/www.rbcwealthmanagement.com\/en-uk\/insights\/inheritance-tax-7-commonly-asked-questions\/"},"modified":"2026-05-26T18:15:50","modified_gmt":"2026-05-26T18:15:50","slug":"inheritance-tax-7-commonly-asked-questions","status":"publish","type":"post","link":"https:\/\/www.rbcwealthmanagement.com\/en-uk\/insights\/inheritance-tax-7-commonly-asked-questions","title":{"rendered":"Inheritance tax: 7 commonly asked questions"},"content":{"rendered":"\n<p>Understanding how inheritance tax (IHT) works and how to mitigate it could help you pass on more wealth to your children and grandchildren. However, <a href=\"https:\/\/www.rbcwealthmanagement.com\/en-uk\/private-clients\/our-services\/inheritance-tax-and-estate-planning\" class=\"link-underline\">IHT and estate planning<\/a> can be complicated and it\u2019s not something you want to get wrong.<\/p>\n\n\n\n<section class=\"wp-block-rbcwm-rbc-block rbc-block rbc-block-flush rbc-block-small\"><div class=\"\"><div class=\"row \"><div class=\"col-lg-12\">\n<div class=\"wp-block-rbcbd-download-banner rbc-card rbc-card-grey mb-2\"><div draggable=\"false\" class=\"rbc-card-wrap\"><div class=\"rbc-card-body\"><div class=\"row justify-content-center align-items-center\"><div class=\"col-7 col-md-4 col-lg-2 mb-1 mb-md-0\"><a class=\"rbc-link-thumbnail\" href=\"https:\/\/www.rbcwealthmanagement.com\/en-uk\/insights\/a-guide-to-inheritance-tax-planning\"><img decoding=\"async\" src=\"https:\/\/www.rbcwealthmanagement.com\/en-uk\/wp-content\/uploads\/sites\/23\/2023\/10\/BD2167_2303_A-guide-to-inheritance-tax-planning.png\" alt=\"Top image for carousel\"\/><\/a><\/div><div class=\"col-md-8 col-lg-10\"><h3>A guide to inheritance tax planning<\/h3><div class=\"hr-mini my-1-half bdr-accent\"><\/div>\n<p class=\"paragraph-intro\">Learn more about estate planning, and how writing a will, lifetime gifting and managing your IHT liability can help you and your loved ones in our comprehensive guide.<\/p>\n\n\n\n<p><a href=\"https:\/\/www.rbcwealthmanagement.com\/en-uk\/insights\/a-guide-to-inheritance-tax-planning\" data-type=\"post\" class=\"link-cta link-chev\">Download guide<\/a><\/p>\n<\/div><\/div><\/div><\/div><\/div>\n<\/div><\/div><\/div><\/section>\n\n\n\n<p>&nbsp;<br>We\u2019ve compiled a list of questions that clients have asked our experts in their one-to-one meetings and during our webinars. While the answers are no substitute for&nbsp;<a href=\"https:\/\/www.rbcwealthmanagement.com\/en-uk\/private-clients\/our-services\/financial-planning-and-advice\">tailored financial advice<\/a>, we hope the information will help you feel a bit more confident when planning your legacy.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-1-how-much-can-my-loved-ones-inherit-before-iht-becomes-due-nbsp\">1. How much can my loved ones inherit before IHT becomes due?&nbsp;<\/h2>\n\n\n\n<p>If your estate is valued at above the\u00a0<a href=\"https:\/\/www.rbcwealthmanagement.com\/en-uk\/insights\/whats-iht-and-how-can-i-manage-it\">IHT \u2018nil-rate band\u2019<\/a>\u00a0of \u00a3325,000 when you die, the excess may be liable for IHT. Currently, the standard IHT rate is 40%. IHT isn\u2019t normally payable if you leave everything to your spouse or civil partner. In fact, married couples and civil partners can transfer any unused element of their IHT nil-rate band to their living partner when they die, effectively doubling it to \u00a3650,000.<\/p>\n\n\n\n<p>If you pass on your main residence (or the sale proceeds of your former residence) to your children or grandchildren when you die, you might also qualify for the \u2018residence nil-rate band\u2019, which is a maximum of \u00a3175,000. Like the standard nil-rate band, you can transfer any unused portion to your surviving spouse or civil partner when you die. That means a couple could potentially pass on up to \u00a31m before IHT becomes due.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-2-how-can-iht-be-managed\">2. How can IHT be managed?<\/h2>\n\n\n\n<p>There are several ways to manage IHT, but only if you plan ahead. For example, gifting money during your lifetime could help to reduce the size of your estate, which in turn can help to reduce your estate\u2019s IHT liability.<\/p>\n\n\n\n<p>There are a range of allowances that can enable you to gift money tax efficiently, including gifts of up to \u00a33,000 each tax year (your \u2018annual exemption\u2019), gifts for weddings or civil partnerships, and gifts from regular income. Larger gifts to individuals are known as \u2018potentially exempt transfers\u2019 and you must live for at least a further seven years for them to be tax free.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-3-can-i-give-my-house-to-my-children-to-avoid-iht\">3. Can I give my house to my children to avoid IHT?<\/h2>\n\n\n\n<p>If you give your house to your children, you must live for at least a further seven years after making the gift for it to be considered outside of your estate for IHT purposes. However, the gift must be made unconditionally. If you benefit from the property in any way, the gift will be a \u2018gift with reservation of benefit\u2019 and will remain in your estate.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-4-can-i-live-in-my-house-after-giving-it-to-my-children\">4. Can I live in my house after giving it to my children?<\/h2>\n\n\n\n<p>If you gift your home to your children but continue to live in the property, it will be deemed a gift with reservation of benefit. This means the property will remain in your estate and may be subject to IHT when you die.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-5-is-my-pension-included-in-my-estate\">5. Is my pension included in my estate?<\/h2>\n\n\n\n<p>Pensions\u00a0currently fall outside of your estate, which means they can be passed on to your beneficiaries free from IHT. However, under planned changes, the value of \u2018unused pension funds and death benefits\u2019 will be brought into a person\u2019s estate for IHT purposes from April 2027.<\/p>\n\n\n\n<p>Planning&nbsp;how to fund your retirement will depend on your individual circumstances, including when you retire and how much you\u2019ve saved up in different savings and investment pots. We can advise on the most&nbsp;<a href=\"https:\/\/www.rbcwealthmanagement.com\/en-uk\/private-clients\/our-services\/wealth-management\">tax-efficient solution<\/a>&nbsp;for you.<a id=\"_msocom_1\"><\/a><\/p>\n\n\n\n<p>The rules around pensions are complex and subject to change, so it\u2019s always worth getting financial advice to ensure you are up to date.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-6-who-pays-iht\">6. Who pays IHT?<\/h2>\n\n\n\n<p>IHT is paid directly from your estate. It is the responsibility of your estate\u2019s executor or administrator to organise the payment. IHT can be paid from funds within your estate or from money raised from the sale of assets. Often, IHT is paid through the \u2018Direct Payment Scheme\u2019. This enables the executor or administrator to ask your bank or building society to make a payment from your account to HMRC.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-7-can-my-children-pay-the-iht-bill-out-of-the-money-they-inherit\">7. Can my children pay the IHT bill out of the money they inherit?<\/h2>\n\n\n\n<p>No. Your beneficiaries should only receive their inheritance once your estate\u2019s IHT, debts and other liabilities have been paid. If the executor or administrator distributes the estate without settling the IHT bill first, they could be held personally liable for paying the outstanding bill.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Next steps<\/h2>\n\n\n\n<p>There are other potential ways to reduce IHT, including setting up trusts, specialist investment vehicles and whole-of-life insurance, but the best course of action is to seek financial advice and consult with your tax adviser early on. That way you\u2019ll give yourself the best chance of passing on a legacy that suits your family\u2019s unique circumstances. Don\u2019t just leave a gift, leave a legacy. <\/p>\n\n\n\n<p>If you\u2019d like to speak to one of our wealth managers about IHT and estate planning, please\u00a0<a href=\"https:\/\/www.rbcwealthmanagement.com\/en-uk\/private-clients\/contact-us\">get in touch<\/a>.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<section class=\"wp-block-rbcwm-rbc-block rbc-block rbc-block-flush rbc-block-small\"><div class=\"\"><div class=\"row \"><div class=\"col-lg-12\">\n<div class=\"wp-block-rbcbd-short-cta-banner rbc-card-well row justify-content-center\"><div class=\"col-lg-12\"><div class=\"rbc-card text-center ani-up rbc-card-grey\"><div draggable=\"false\" class=\"rbc-card-wrap\"><div class=\"rbc-card-body false \"><div class=\"d-flex justify-content-center\"><div class=\"paragraph-mw\">\n<h3 class=\"wp-block-heading has-text-align-left h5\" id=\"h-get-financial-planning-tips-straight-to-your-inbox\" style=\"font-style:normal;font-weight:400\">Get financial planning tips straight to your inbox<\/h3>\n\n\n\n<p class=\"has-text-align-left paragraph-intro mb-1 is-style-default has-medium-font-size\">Sign up to our newsletter for expert insights on investing for the future, saving for retirement, passing on assets to the next generation, and much more.<\/p>\n\n\n\n<p class=\"has-text-align-left\"><a href=\"https:\/\/www.rbcwealthmanagement.com\/en-uk\/subscribe-to-our-newsletter\" data-type=\"page\" data-id=\"14603\" class=\"link-cta link-chev\">Subscribe<\/a><\/p>\n<\/div><\/div><\/div><\/div><\/div><\/div><\/div>\n<\/div><\/div><\/div><\/section>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>The value of investments, and any income from them, can fall and you may get back less than you invested. RBC Brewin Dolphin is not a tax specialist and this does not constitute tax advice. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. You should always check the tax implications with an accountant or tax specialist. Information is provided only as an example and is not a recommendation to pursue a particular strategy. Information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Find out the answers to some of the most common questions around inheritance tax and estate planning.<\/p>\n","protected":false},"author":97,"featured_media":11726,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"rbcwm_post_date":"","editor_notices":[],"rbc_url_alias":"","rbcbd_featured_desktop_image_position":"","rbcbd_featured_mobile_image_position":"center-right","footnotes":"","jetpack_post_was_ever_published":false},"categories":[785],"tags":[],"rbcwm_content_owner":[],"rbcwm_need":[770],"rbcwm_segment":[772],"rbcwm_solution":[758],"rbcwm_topic":[120],"rbcwm_channel":[99,781],"rbcwm_format":[779],"class_list":["post-23118","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-inheritance","rbcwm_need-live-well","rbcwm_segment-individuals","rbcwm_solution-wealth-planning","rbcwm_topic-inheritance-and-estate-planning","rbcwm_channel-private-clients","rbcwm_channel-uk-individual","rbcwm_format-article"],"acf":{"rbc_ct_service":"","rbc_ct_theme":false,"rbc_ct_topic":false,"rbcwm_subtitle":"Find out the answers to some of the most common questions around inheritance tax and estate planning.","rbcwm_post_author":"","rbcwm_custom_breadcrumb_text":"","rbcwm_custom_breadcrumb_link_url":"","rbcwm_disclaimers":{"add_disclosures":"","perspective_disclaimer":"","expandable":"","omit_from_pages":"","disclaimer_footnote":""},"rbcwm_insight_cta_id":"","rbcwm_pagination":{"next_link":"","next_link_text":"Next article","previous_link":"","previous_link_text":"Previous article"},"rbcwm_video_duration":"","article_time":3,"rbcwm_enable_toc":false},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.5 (Yoast SEO v27.6) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Inheritance tax: 7 commonly asked questions | RBC Wealth Management United Kingdom<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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