Inheritance Tax: Understanding the Allowances That Shape Family Outcomes

Описание: Inheritance Tax Explained: Understanding Allowances, Traps, and Family Planning

Inheritance tax is often reduced to a single headline rate — but in reality, it’s a layered system of allowances, thresholds, and conditions that can dramatically change outcomes for families.

In this video, Michelle Holgate, Director and Wealth Manager at RBC Wealth Management, breaks inheritance tax back to its core components. We explore how the nil rate band and residence nil rate band really work, why they’re so often misunderstood, and how seemingly small decisions can have a significant impact on what families ultimately pass on.

Using real-world examples, we look at how inheritance tax interacts with pensions, trusts, surplus income, and intergenerational planning — and why viewing tax as a *structure*, rather than a single number, can unlock more effective outcomes.

In this video, we cover:

The Layers of Inheritance Tax:
Why the headline 40% rate rarely tells the full story — and how allowances are applied in practice.

Nil Rate Band Explained:
How the £325,000 allowance works, how it transfers between spouses, and where families often go wrong.

The Residence Nil Rate Band:
Who qualifies for the additional £175,000, the £2 million estate taper, and the conditions that frequently catch families out.

Hidden Estate Traps:
How assets like business relief investments and pensions interact with inheritance tax calculations — and why context matters.

Pensions & the 2027 Changes:
Why pensions currently sit outside the estate, what’s changing from April 2027, and how that alters long-term planning.

Gifting Strategies That Work:
Annual gifting, gifts from surplus income, and how habitual giving can reduce inheritance tax without using allowances.

Intergenerational Tax Planning:
Using family tax bands, pensions, trusts, and allowances across generations to reduce overall tax leakage.

The 60% Tax Trap:
How income over £100,000 can create an unexpected marginal tax rate — and how pension contributions can mitigate it.

Why Communication Matters:
How open family discussions can unlock planning opportunities that are often missed.

Key Timestamps:

0:00 – Why inheritance tax is layered, not linear
1:10 – Nil rate band and spousal transfer explained
2:15 – Residence nil rate band conditions and limits
3:45 – The £2 million taper and common misconceptions
4:40 – Pensions, business relief, and estate calculations
6:10 – Gifting from income and annual allowances
7:45 – Trusts, grandchildren, and school fees
9:10 – The 60% tax trap and pension planning
10:45 – Upcoming tax changes and why flexibility matters

Are you confident you understand how inheritance tax applies to your family?
Share your thoughts or questions in the comments below.

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Disclaimer:
The value of investments, and any income from them, can fall and you may get back less than you invested. This does not constitute tax or legal 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.