How Can an Accountant Help Me With Inheritance Tax Planning

At Towerstone, we provide specialist Inheritance Tax accountancy services for families and executors. We have written this article to explain what planning support can include and how it reduces risk, helping you make informed decisions.

Inheritance tax is one of those topics that people tend to put off until they feel they have no choice but to deal with it. From experience I can say that this is completely understandable. Thinking about death money and tax at the same time is uncomfortable and for many people it feels premature or even pessimistic. In my opinion however inheritance tax planning is not about death at all. It is about control clarity and protecting the people you care about from unnecessary financial stress.

I have worked with individuals families and business owners across a wide range of circumstances and one thing is consistently true. Those who plan early with the right advice tend to pass on more of their wealth with far fewer complications. Those who do not often leave behind confusion avoidable tax bills and difficult decisions for loved ones.

In this article I want to explain clearly and honestly how an accountant can help with inheritance tax planning in the UK. I will cover what inheritance tax planning actually involves how it fits into your wider financial picture and the specific ways an accountant adds value beyond simply knowing the rules. I will also share insights from experience including common mistakes people make when they try to plan alone and why good planning is as much about judgement as it is about legislation.

By the end you should understand not only what an accountant does in this area but whether inheritance tax planning is something you should be thinking about now rather than later.

What inheritance tax planning really means

Before looking at the role of an accountant it is important to clarify what inheritance tax planning actually is. In my opinion one of the biggest misconceptions is that it is about avoiding tax at all costs. That mindset often leads to poor decisions.

Inheritance tax planning is about arranging your affairs so that when you die your estate is passed on in the most tax efficient way possible within the law while still meeting your personal and family objectives.

That involves balancing several competing priorities:

• Providing for your spouse or partner
• Helping children or grandchildren at the right time
• Retaining financial security during your lifetime
• Minimising inheritance tax where appropriate
• Avoiding unnecessary complexity or risk

From experience good inheritance tax planning is rarely about one big dramatic move. It is usually about a series of sensible decisions made over time.

Why inheritance tax planning is becoming more important

In my opinion inheritance tax planning is no longer just an issue for the very wealthy. Rising property prices frozen tax thresholds and longer life expectancy mean that more families are affected each year.

The inheritance tax nil rate band has been frozen at £325,000 for many years. The residence nil rate band adds complexity but also creates traps where estates fall just outside the rules. From experience I see many estates paying inheritance tax simply because planning was left too late or assumptions were wrong.

An accountant’s role is to look ahead and identify these risks early rather than reacting once it is too late to do anything meaningful.

The accountant’s role in inheritance tax planning

An accountant does not just apply tax rules in isolation. In my opinion their real value lies in seeing the whole financial picture and understanding how different decisions interact over time.

Inheritance tax planning typically involves:

• Reviewing the value and structure of your estate
• Identifying inheritance tax exposure
• Explaining available reliefs and exemptions
• Modelling different scenarios
• Implementing practical planning strategies
• Reviewing plans as circumstances change

From experience this is an ongoing process rather than a one off exercise.

Understanding your estate properly

The first thing an accountant will usually do is help you understand what your estate actually looks like for inheritance tax purposes.

This is not always obvious. People often underestimate the value of their estate or misunderstand what is included.

An estate can include:

• Property and land
• Savings and investments
• Pensions in some cases
• Business interests
• Trust interests
• Personal possessions of value
• Life insurance not written in trust

From experience simply pulling this together in one place often changes how people view their situation. Many people assume inheritance tax is not an issue until they see the full picture laid out clearly.

Calculating inheritance tax exposure

Once the estate is understood an accountant can calculate potential inheritance tax exposure under current rules.

This involves looking at:

• The nil rate band
• The residence nil rate band
• Spousal exemptions
• Lifetime gifts
• Reliefs such as business or agricultural relief

From experience this calculation is rarely static. It depends on assumptions about asset growth family circumstances and future tax rules.

In my opinion this is where accountants add significant value by explaining not just what the tax looks like today but what it might look like in ten or twenty years if nothing changes.

Explaining what options are realistically available

One of the most valuable things an accountant does is separate theory from reality.

There are many inheritance tax planning ideas discussed online but not all are suitable or sensible for every situation. From experience clients often arrive with half understood strategies that are either outdated or inappropriate.

An accountant can explain:

• Which reliefs actually apply to you
• Which strategies fit your financial position
• Which ideas carry unnecessary risk
• What HMRC is likely to challenge

In my opinion good advice is as much about saying no as it is about saying yes.

Lifetime gifting strategies

One of the most common areas where accountants help is lifetime gifting.

From experience many people want to help their family during their lifetime but worry about giving away too much or triggering tax problems. An accountant can help structure gifts so they are tax efficient and sustainable.

This includes advice on:

• Annual gift allowances
• Wedding and small gift exemptions
• Larger lifetime gifts and the seven year rule
• Regular gifts out of surplus income
• Record keeping and evidence

In my opinion this is one of the most effective areas of inheritance tax planning when done properly and early enough.

Using pensions as an inheritance tax tool

Pensions are one of the most powerful inheritance tax planning tools available under current UK rules and from experience they are often misunderstood.

An accountant can help you understand how pensions fit into your estate planning including:

• Which pensions fall outside your estate
• How death benefits are taxed
• How beneficiary nominations affect outcomes
• When it may make sense to spend non pension assets first

In my opinion pensions are increasingly being used as family wealth vehicles and an accountant can help you use them strategically rather than accidentally.

Business and agricultural relief planning

For business owners inheritance tax planning is often closely linked to business succession planning.

Business relief can remove up to 100 percent of qualifying business assets from inheritance tax. Agricultural relief can do the same for qualifying farmland.

From experience however these reliefs are technical and easy to get wrong. An accountant can help with:

• Assessing whether assets qualify
• Structuring ownership correctly
• Avoiding activities that dilute relief
• Planning succession without losing relief

In my opinion this is an area where specialist advice is essential because the stakes are high and HMRC scrutiny is common.

Trust planning and when it makes sense

Trusts are often associated with inheritance tax planning but they are not always appropriate.

From experience trusts work best where there are clear non tax reasons such as protecting vulnerable beneficiaries or controlling how wealth is passed on.

An accountant can help you understand:

• What type of trust might be appropriate
• How trusts are taxed
• The inheritance tax charges involved
• The ongoing compliance requirements

In my opinion trusts should be used deliberately and carefully rather than as a default solution.

Property ownership and inheritance tax

Property is often the largest asset in an estate and one of the most complex from a tax perspective.

An accountant can advise on:

• How property ownership affects inheritance tax
• Joint ownership structures
• Gifting property interests
• Using companies or trusts appropriately
• Interactions with capital gains tax and stamp duty

From experience poor property planning creates more problems than it solves. Good advice focuses on the whole tax picture not just inheritance tax in isolation.

Life insurance and funding inheritance tax

Another area where accountants add value is in planning how inheritance tax will be funded.

Life insurance written in trust can provide funds to pay inheritance tax without increasing the estate value.

An accountant can help assess:

• Whether insurance is appropriate
• How much cover may be needed
• How it fits with other planning strategies

From experience this approach provides peace of mind particularly where wealth is tied up in illiquid assets.

Scenario modelling and what if planning

One of the most practical ways an accountant helps is through scenario modelling.

This involves looking at different possibilities such as:

• What happens if you die sooner than expected
• What happens if asset values increase significantly
• How changes in family circumstances affect outcomes
• The impact of different gifting strategies

In my opinion this is invaluable because it turns abstract rules into real world consequences.

Helping you avoid common mistakes

From experience the most common inheritance tax planning mistakes include:

• Leaving planning too late
• Giving away too much too quickly
• Failing to document gifts properly
• Assuming spouses and unmarried partners are treated the same
• Ignoring the interaction with other taxes

An accountant’s role is often to spot these risks early and steer you away from them.

Reviewing and adapting plans over time

Inheritance tax planning is not something you do once and forget about.

Tax rules change family circumstances change and asset values change. From experience the best plans are reviewed regularly and adjusted as needed.

An accountant can provide:

• Periodic reviews
• Updates on relevant tax changes
• Adjustments to reflect life events
• Ongoing reassurance that plans remain appropriate

In my opinion this ongoing relationship is where the real value lies.

Emotional and practical reassurance

It is easy to focus solely on tax savings but there is also a human side to this work.

From experience clients often say that inheritance tax planning gave them peace of mind. Knowing that things were organised and that their wishes were clear reduced anxiety for both them and their family.

An accountant provides an objective sounding board and helps turn vague intentions into clear actionable plans.

When inheritance tax planning may not be necessary

It is also important to say that inheritance tax planning is not always needed.

If your estate is well below the inheritance tax threshold and likely to remain so extensive planning may add complexity without benefit.

In my opinion a good accountant will tell you when planning is unnecessary as well as when it is valuable.

Where this leaves you

So how can an accountant help with inheritance tax planning? In short by bringing clarity structure and foresight to an area that is often clouded by uncertainty.

In my opinion the greatest benefit of working with an accountant is not just saving tax but making informed decisions with confidence. From experience the people who benefit most are those who start planning early and treat inheritance tax as part of their wider financial picture rather than a last minute problem.

If there is one takeaway it is this, inheritance tax planning is not about avoiding something unpleasant in the future, it is about taking control today so that your wealth supports the people you care about in the way you intend.

If you would like to explore related Inheritance Tax guidance, you may find How can I plan ahead to reduce future Inheritance Tax and How do charitable donations reduce Inheritance Tax useful. For broader inheritance tax guidance, visit our inheritance tax hub.