posted 20th August 2025
Inheritance tax (IHT) is often described as the “voluntary tax” because, with proper planning, much of it can be reduced or avoided altogether. Yet, thousands of families across the UK pay more inheritance tax than necessary simply because they did not take professional advice in time.
At Meridian Legal Services, we specialise in helping families protect their wealth, ensuring that assets pass smoothly to loved ones while minimising the burden of inheritance tax.
This article explains inheritance tax, the changes affecting families in 2025 and beyond, and the key steps you can take today to protect your family.
What is Inheritance Tax?
Inheritance tax is a levy on the estate (property, money, possessions) of someone who has passed away. The UK's inheritance tax threshold is £325,000 (known as the "nil rate band"). Anything above this amount may be taxed at 40%.
There are some exemptions — for example, if you leave your estate to your spouse, civil partner, or a charity, no inheritance tax is due. An additional residence nil rate band of £175,000 can apply when passing on your home to direct descendants.
Couples can combine their allowances, meaning up to £1 million can potentially be passed on tax-free. However, your family could still face a significant inheritance tax bill without careful planning.
Why Inheritance Tax Planning Matters
Failing to plan for inheritance tax can devastate your loved ones. Families often find themselves forced to sell property, family heirlooms, or investments to cover the tax bill. This can cause stress, disputes, and financial strain at a difficult time.
Effective inheritance tax planning ensures:
- More wealth stays in your family rather than going to HMRC.
- A smoother administration process, reducing delays and complications.
- Peace of mind knowing your loved ones are provided for.
At Meridian Legal Services, we work closely with families across the UK to develop tailored estate planning strategies.
Key Updates for 2025 and Beyond
Inheritance tax rules are becoming more complex, and HMRC scrutiny is increasing. Some of the most important developments include:
- Inheritance tax on pensions: From April 2027, pension pots will be subject to IHT even if you die before retirement. This significant change means many more estates will face tax liabilities MoneyWeek
- HMRC crackdowns: Families underpaying IHT are increasingly being investigated, with HMRC raising hundreds of millions from additional checks The Times
- Frozen allowances: With thresholds locked until at least 2028 and property values rising, more middle-class families are falling into the IHT net. This "fiscal drag" is now a significant concern Financial Times
Proven Strategies to Protect Your Family from Inheritance Tax
Several legal and financial tools can significantly reduce or eliminate inheritance tax liability. Some of the most effective include:
- Making Use of Allowances and Exemptions
Every individual has a £325,000 nil rate band, and couples can combine theirs to pass on up to £650,000 tax-free.
The residence nil rate band (up to £175,000 per person) can further increase this allowance. We help families structure their estates to maximise these valuable thresholds.
- Lifetime Gifts
You can give away assets during your lifetime to reduce the value of your estate. Some gifts are immediately exempt (such as the annual £3,000 gift allowance), while others may fall outside your estate if you survive for seven years. Strategic gifting can save your family thousands in taxes.
- Trusts
Placing assets into a trust can be an excellent way to protect wealth, control its distribution, and reduce inheritance tax exposure. Trusts are complex, but with expert guidance, they can form the backbone of a robust estate plan.
- Life Insurance to Cover IHT
Sometimes, a life insurance policy written in trust can provide funds to cover any inheritance tax liability. This ensures your family does not need to sell assets quickly to settle the tax bill.
- Business and Agricultural Relief
If you own a business or farmland, you may qualify for reliefs that reduce inheritance tax by up to 100%. We advise business owners on how to secure and protect these valuable exemptions.
The Role of Professional Advice
Inheritance tax rules are complicated and frequently change. What works for one family may not be suitable for another. That's why seeking professional legal advice tailored to your situation is vital.
At Meridian Legal Services , we:
- Analyse your estate and family structure.
- Identify opportunities for tax savings.
- Draft essential legal documents such as wills and trusts.
- Work alongside financial advisers and accountants to provide a complete strategy.
Our goal is simple: to give you peace of mind knowing your family's future is secure.
Take Action Today
Inheritance tax can feel like an unavoidable burden, but much of it can be reduced or eliminated with the proper planning. The earlier you start planning, the more options you will have to protect your family's wealth.
Please don't leave it until it's too late.
Contact Meridian Legal Services today for expert inheritance tax and estate planning advice.
Email us at info@meridianlegalservices.co.uk to book a confidential consultation.
