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Why DG Financial Services Ltd?

Inheritance Tax planning

Do you have an estate plan in place to give you peace of mind, knowing your assets will be passed on exactly as you wish?

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Giving you peace of mind

Inheritance Tax (IHT) can seem like a complex and daunting subject.

At DG Financial Services Ltd, we believe that with careful planning, you can manage your IHT liability effectively and ensure your assets are passed on according to your wishes.

What is Inheritance Tax?

Inheritance Tax is a tax on the estate—the property, money, and possessions—of someone who has passed away. It is also sometimes payable on trusts or gifts made during a person’s lifetime.

The key thing to understand is that IHT is not usually paid on the entire value of an estate. A certain amount can be passed on tax-free, which is known as the ‘nil-rate band’.

Understanding the thresholds

As of the current tax year, the main thresholds are:

Nil-rate band (NRB): Each individual currently has a tax-free IHT allowance of £325,000 for the 2025/26 tax year. This means the first £325,000 of your estate is not subject to Inheritance Tax.

Residence nil-rate band (RNRB): An extra allowance is available if you pass on your main residence to a direct descendant, such as a child or grandchild. This is currently £175,000 for the 2025/26 tax year.

  • These two allowances can be combined. For an individual, this can mean a total tax-free threshold of up to £500,000 (£325,000 + £175,000).
  • For married couples or those in a registered civil partnership, any unused allowance can be transferred to the surviving partner. This means a couple could potentially pass on up to £1 million to their direct descendants completely free of IHT.
  • Any value of the estate above these combined thresholds is typically taxed at a rate of 40%.
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What might bring you here?

People seek advice on Inheritance Tax for many different reasons. You might recognise your own situation in one of these common scenarios:
You're concerned about your family's future
You’ve built a comfortable life and want to ensure your children or grandchildren benefit from your hard work, rather than seeing a large part of it lost to tax.
he rising value of your home may have pushed the total value of your estate over the tax-free threshold, making IHT a new concern for you.
You want to help your children get on the property ladder or support your grandchildren’s education, but you’re unsure of the tax implications of making financial gifts.
You need to understand how your business assets will be treated for IHT purposes and want to explore options like Business Relief.
A life event like marriage, divorce, or the birth of a grandchild has prompted you to review your Will, and you realise you need to consider your potential IHT liability at the same time.
Whatever your reason, taking proactive steps is the key to effective estate planning.
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Strategies for managing Inheritance Tax

While Inheritance Tax rules can be complicated, there are several established strategies you can use to manage your potential liability. Obtaining independent financial advice is crucial to ensure you make informed decisions tailored to your personal circumstances.
1. Make a Will
A will is the foundation of any estate plan. It ensures your assets are distributed exactly as you wish. Without a Will, your estate will be subject to the laws of intestacy, which may not align with your intentions and can complicate the IHT process.

Gifting during your lifetime can be a simple and effective way to reduce the value of your estate.

There are currently several allowances for gifting:

  • Annual exemption: You can give away up to £3,000 each tax year without it being added to the value of your estate. You can also carry forward any unused allowance from the previous year, for one year only.
  • Small gift exemption: You can give as many gifts of up to £250 per person as you want each tax year, as long as you haven’t used another exemption on the same person.
  • Gifts for weddings or registered civil partnerships: You can give a tax-free gift to someone who is getting married. The amount depends on your relationship to them: £5,000 for a child, £2,500 for a grandchild, and £1,000 for anyone else.
  • Gifts out of normal expenditure: Regular payments you make from your surplus income can be exempt from IHT, provided they don't affect your standard of living.
For larger gifts that fall outside these exemptions, the ‘seven-year rule’ applies. If you live for seven years after making the gift, it becomes fully exempt from IHT.
A trust is a legal arrangement that enables you to set aside assets for specific beneficiaries. Trusts can be a powerful tool for IHT planning, as they can remove assets from your estate while still allowing you to set conditions on how and when the beneficiaries can access them. There are various types of trusts, and professional advice is essential to choose the right one for your goals.
A whole-of-life insurance policy, written ‘in an appropriate trust’, can be a practical solution. The policy is designed to pay out a lump sum upon your death, which can then be used by your beneficiaries to cover the IHT bill. Because the policy is in trust, the payout itself does not form part of your estate and is therefore not subject to IHT.
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How our service supports you

At DG Financial Services Ltd, we provide clear, expert, and independent advice tailored to your specific needs. We can help you understand your potential IHT liability and create a robust financial plan to safeguard the legacy you intend to leave behind.

Our approach to long-term life planning is built around you. We don’t believe in one-size-fits-all solutions or generic advice that doesn’t take into account your personal circumstances and dreams

What to expect when you work with us

We’re committed to helping you attain the clarity in estate planning you deserve:

Initial consultation

We’ll start with a confidential, no-obligation meeting to listen to your situation, understand your concerns, and identify your immediate priorities.

Financial review

Our team will conduct a thorough review of your shared and individual finances to create a complete picture of your assets, liabilities, and future needs.

Strategic plan

We will develop a clear, personalised financial plan with actionable steps, helping you move towards financial independence.

Ongoing support

As you implement your plan, we remain available to answer your questions, adjust to any changes, and provide continuous guidance.