Estate & Inheritance · Bath

Inheritance tax
planning.

The conversation most clients put off. Done properly, it protects what you’ve built for the people who come next — and removes a burden the next generation should never have to carry. For business owners and senior executives across Bath, Bristol and the South West.

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40%
the rate that falls on everything above your allowances — and the figure planning sets out to reduce.
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Inheritance tax is one of the few taxes you can plan your way around — quietly, legally, and years ahead. Most people simply never start.

A quick illustration

What might your estate owe?

Move the slider to see the rough position on an estate today, using 2026/27 thresholds. A starting point for a conversation — not a calculation of what you’d actually pay.

Whose estate?
£1,400,000
£0£1.5m£3m
Main home to children or grandchildren?
Estimated inheritance tax
£160,000
Roughly what an estate this size could owe — and what planning aims to reduce.
Covered by allowancesPotentially taxable
Estate value£1,400,000
Allowances available£1,000,000
Potentially taxable£400,000
Tax rate on the excess40%

Illustrative only — not personal advice or a tax calculation. Assumes 2026/27 thresholds (£325,000 nil-rate band per person, plus £175,000 residence nil-rate band where a home passes to direct descendants, tapered by £1 for every £2 above £2m), full allowances available, no prior gifts, and no business or agricultural relief. A couple’s figures assume the first estate passes to the survivor spouse-exempt and both sets of allowances are available on the second death. It does not allow for unused pension funds, which come into the estate for deaths on or after 6 April 2027. Your own position will differ.

i. · What this includes

Six levers, used in the right order.

Most estates don’t need all of them. The plan starts with your position and uses only what earns its place.

i.

Estimate and projection

A clear estimate of your current liability, projected over twenty years if nothing changes — so you see the problem before deciding what to do about it.

ii.

Lifetime gifting strategy

Potentially Exempt Transfers and exempt gifts used in the right order and at the right time, so more passes on and less is taxed.

iii.

Gifts from normal expenditure

The under-used exemption that lets regular gifts from genuine surplus income fall outside your estate immediately, with no seven-year wait.

iv.

Trust planning

Bare, discretionary and life-insurance trusts, used where they earn their place — and always alongside your solicitor.

v.

Business Relief, after the 2026 reforms

Qualifying business and agricultural assets held for two years still attract relief, but the rules changed on 6 April 2026 and the answer is no longer “100% and done”. Weighed honestly against the extra investment risk.

vi.

Life cover written in trust

Cover sized to meet the bill, held in trust so it pays out quickly and outside your estate, rather than adding to it. Arranged through protection planning.

ii. · Who this is for

If any of these is you, it’s worth a look.

—Estates likely to exceed the nil-rate bands
—Anyone with adult children or grandchildren
—Business owners considering succession
—Clients expecting an inheritance themselves
—Recently widowed clients with combined estates
—Homeowners in and around Bath with rising values
iii. · My approach

The conversation is harder than the maths.

I work alongside your solicitor, not in place of one. The financial plan and the legal plan need to agree, and frequently don’t.

I’ll model what your estate looks like in twenty years if nothing changes, then show you the levers you can pull.

The work itself is straightforward once we’ve had the conversation. Most of the useful tools reward time, so the earlier we start, the more options you have.

Two things have moved recently and both matter here: the reform of Business and Agricultural Relief on 6 April 2026, and unused pensions joining the estate from April 2027. If you have just been on the receiving end of all this, I have also written about what to do when you have just inherited. The drawing order across pots is part of retirement planning too.

— Andrew

Changing on 6 April 2027

Unused pension funds join the estate.

For deaths on or after 6 April 2027, most unused pension funds and pension death benefits count as part of the estate for inheritance tax, under the Finance Act 2026. Death-in-service benefits from a current employer are excluded, and the spouse and civil partner exemption still applies. Reporting and payment fall to the personal representatives rather than the pension scheme, though they can direct a scheme to withhold up to half of the taxable benefits toward the bill. For many people this reverses the long-standing advice to spend other money before touching the pension. The change explained in plain English.

iv. · Common questions

Inheritance tax, in plain English.

For 2026/27, each person has a £325,000 nil-rate band, plus up to £175,000 more if a main home passes to direct descendants. A married couple can often pass up to £1 million between them. Anything above the available allowances is usually taxed at 40%. Both bands are frozen until 5 April 2031, and the residence band is reduced by £1 for every £2 by which the estate exceeds £2 million.
A gift to an individual is a potentially exempt transfer: survive seven years and it falls out of your estate entirely. Die within seven years and it is brought back in. Taper relief can reduce the tax on gifts made between three and seven years before death — from 40% down through 32%, 24%, 16% and 8% — but it only bites where cumulative gifts exceed the nil-rate band, which catches people out. Separately, you can give away £3,000 a year under the annual exemption, £250 each to any number of other people, and set amounts on a wedding.
A great deal, and it is the most misunderstood part of this subject right now. From 6 April 2026, 100% Business and Agricultural Relief is capped by a £2.5 million allowance per person, transferable between spouses; qualifying assets above that get 50% relief, so an effective 20% inheritance tax charge. Separately, shares designated as not listed on a recognised exchange — which includes AIM — now get 50% relief regardless of value, where before they got 100%. An AIM portfolio held for two years therefore now carries an effective 20% charge rather than none. The two-year ownership rule itself has not changed. Any article you read saying AIM shares are inheritance-tax-free after two years, or quoting a £1 million cap, predates the current rules.
Until 5 April 2027, most unused pension funds sit outside the estate. For deaths on or after 6 April 2027 they come into it, under the Finance Act 2026. Death-in-service benefits from a current employer are excluded, and anything passing to a spouse or civil partner remains exempt. The practical effect is that the order in which you draw from pensions, ISAs and other savings may need rethinking, because the old rule of thumb — spend everything else first and leave the pension alone — no longer holds for many people.
Yes, in one specific way: if you leave 10% or more of the net estate to charity, the rate on the rest falls from 40% to 36%. Whether that leaves your family better off depends on the numbers, and it is worth modelling rather than assuming. Otherwise the route to a smaller bill is a smaller taxable estate, not a lower rate.
Some of it. Using allowances and gifting is general planning; trusts, Business Relief and life cover involve regulated advice and legal work. I’m clear about which is which, and bring in your solicitor where it’s needed.
Most of the useful tools reward time — a gift can take seven years to fall fully outside your estate. The earlier the plan, the more options you have. It’s rarely too early; it can be too late.
Not as much as people think. With thresholds frozen until 2031 and house prices in and around Bath where they are, ordinary estates increasingly cross the line. If you own a home and have savings, it’s worth a look.
No. I work alongside them. The aim is a plan that’s coherent across everyone involved — not all the fees flowing to me.

This page, and the estimate on it, are general educational information about how inheritance tax works in the UK. They are not personal financial or tax advice and do not take account of your individual circumstances. Tax thresholds and rules are subject to change. Please take regulated advice on your own situation before acting.

Risk warnings. The value of investments and any income from them can fall as well as rise. You may get back less than you invest. HM Revenue and Customs practice and the law relating to taxation are complex and subject to change; tax allowances and rules may not remain as they are today. Investments qualifying for Business Relief, including AIM shares, carry materially higher risk than mainstream investments, can be harder to sell, and their qualifying status is not guaranteed and is assessed at the date of death.

Figures. Thresholds and rates shown are for the 2026/27 tax year and reflect the Business and Agricultural Relief reforms in force from 6 April 2026 and the Finance Act 2026 treatment of pensions from 6 April 2027. Sources: gov.uk inheritance tax and Finance Act 2026, Schedule 12. This page was last reviewed in August 2026.

Andrew Daw is an Appointed Representative of Saltus Wealth Partnership Limited (FCA FRN 449607), trading as Duchy IFA. For UK residents only.

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