Some of the UK’s wealthiest families were landed with inheritance tax bills in excess of £9.2million, according to latest annual figures.
Titan Wealth Planning used Freedom of Information (FOI) laws to obtain data on the country’s largest estates and IHT bills – as pension savers and farmers face future soaring charges as a result of changes announced in The Budget.
According to figures for 2021-22, the top 40 largest IHT bills averaged £9.2m – meaning those at the top of the tree will likely have paid far greater. Titan’s FOI request revealed that 889 families were stung with charges in excess of £1m, including 67 estates where IHT exposure was greater than £4million.
While the average net estate value for the largest 40 taxpaying estates was £42.4m, the figures released by HMRC illustrate it isn’t just the super-wealthy who face exposure to death duties. In recent years, growing numbers of middle-class families have faced unexpected six-figure bills – as spiking home prices brought them into the IHT net.
According to the data obtained by Titan Wealth Planning, there were 13,329 estates where IHT was in excess of £100,000, including 6,059 estates where taxes were in excess of £250,000, and 2,519 where tax liability was greater than £500,000.
Derek Miles, CEO of Titan Wealth Planning, commented: “Inheritance tax was once a concern of the wealthy only – but not anymore.
“Middle-income earners are already seeing intergenerational wealth eroded as a result of taxes on inherited homes. Looking ahead, changes to how inherited farms and pensions are taxed promise to increase IHT charges even further, unless you take the necessary steps to mitigate exposure.
“Against the backdrop of the recent budget, more and more families – including farmers – are asking how they can pass something on to the next generation in the most tax efficient manner. The good news is that with the right counsel and expertise, it is possible to lessen the blow and give loved ones a head start.”
Standard IHT is currently charged at 40% for estates worth more than £325,000 with an extra £175,000 allowance towards a main residence if it is passed to direct descendants.
Married couples or civil partnerships can share their allowance, meaning they can pass on £1 million to their children tax free.
However, pension wealth – previously exempt from IHT – will now form part of the deceased person’s estate from April 2027, following changes announced in Rachel Reeves’ Budget.
The Chancellor also announced reforms to agricultural property relief (APR) and business property relief (BPR) which will mean that from April 2026, farmers will be liable to pay a tax of 20% on inherited agricultural and business assets valued at more than £1m, which were previously exempt.
Farming leaders have warned that the changes will force families to sell off land to pay the charges.
Inheritance Tax Bills 2021-22
| Amount | Number of Estates |
| £1-£50,000 | 9,120 |
| £50,000-£100,000 | 5,400 |
| £100,000-£150,000 | 3,380 |
| £150,000-£200,000 | 2,320 |
| £200,000-£250,000 | 1,570 |
| £250,000-£300,000 | 1,120 |
| £300,000-£350,000 | 819 |
| £350,000-£400,000 | 674 |
| £400,000-£450,000 | 532 |
| £450,000-£500,000 | 395 |
| £500,000-£1,000,000 | 1,630 |
| £1,000,000-£2,000,000 | 630 |
| £2,000,000-£3,000,000 | 128 |
| £3,000,000-£4,000,000 | 64 |
| £4,000,000+ | 67 |
Titan Wealth Planning is reminding families that they can still make use of a rule allowing individuals to make gifts of unlimited value which become exempt from inheritance tax if the giver survives a further seven years – known as a “potentially exempt transfer” (PET).
If the giver dies within the seven years, then inheritance tax on the amount in excess of the available nil rate band is payable by the recipient on a sliding scale of 8-40% depending on the passage of time between the gift being made and the donor passing.
Inheritance tax on gifts above £325,000
| Years between gift and death | Chargeable amount | Effective rate of inheritance tax |
| Less than 3 years | 100% | 40% |
| 3 to 4 years | 80% | 32% |
| 4 to 5 years | 60% | 24% |
| 5 to 6 years | 40% | 16% |
| 6 to 7 years | 20% | 8% |
| 7+ years | 0 | 0 |
Derek Miles said: “The big danger in postponing lifetime giving is that the older you are, the greater the chance you won’t survive the full seven years. Far better to sit down with a financial planner sooner rather than later and make sure your loved ones are not landed with an unnecessary tax bill after you’re gone.
“It’s also crucial to understand the rules before you embark on this course of action. For example, if you gift a property to your children, you can’t live there rent free afterwards. If you do, then the IHT exemption will no longer apply.
“This is something particularly relevant to farmers looking to make use of lifetime gifting, given that many will actually live on their farms.”
Using trusts
Another pillar of long-term family wealth planning involves making gifts into a trust.
This allows donors to give away assets indirectly. Typically, a trust is held and managed by a third party known as a trustee.
It is increasingly common for grandparents to set aside money for grandchildren with the parents as trustees. Money is typically released when the trustees decide the grandchildren are mature enough to handle the responsibility of managing their own finances.
Derek Miles said: “Choosing the right type of trust for your family is an essential part of financial planning.
“Some trusts give the child the absolute entitlement to the money at a certain age, while others offer the trustees greater flexibility and discretion.
“It is also possible to make provisions for children who have not been born yet.”
