Inheritance Tax used to be a worry for the wealthy only. In 2026, with the nil-rate band still frozen at £325,000 and property prices where they are, ordinary middle-class families are being caught out more than ever before.
The key allowances in 2026
The standard nil-rate band remains £325,000 per person. On top of that, most homeowners leaving their main residence to direct descendants also get the £175,000 residence nil-rate band. Combined, a married couple can pass on up to £1 million tax-free, but only if the Will is structured correctly.
Where people lose out
Life insurance written outside of trust is the biggest avoidable mistake we see. A policy intended to help your family can instead boost your estate over the threshold and trigger 40% tax on everything above it.
Simple steps that help
Lifetime gifting, pensions, charitable giving and Trusts can all reduce your exposure. The right combination depends on your circumstances, which is exactly what a proper estate plan is for.
If you haven’t reviewed your estate against the 2026 thresholds, it’s well worth a conversation.
Have a question about this?
Book a free, no-obligation consultation with Colin.
