This one decision could help you save £400,000 in Inheritance Tax

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Estate planning is a key component of your wider financial plan, but it is something people often leave to later in life.

While this is an understandable approach, it may also result in you passing on considerably less than you would if you had started earlier, as more of your estate is exposed to Inheritance Tax (IHT).

This is because some estate planning strategies are best executed over multiple years or even decades, rather than being quickly implemented towards the end of your life.

Read on to find out why starting your estate plan sooner rather than later can be advantageous.

Starting your estateplan earlier could save you nearly £400,000

A report in Today’s Wills & Probate found that families in the top 10% of UK wealth could pass an average of £397,000 more to their loved ones if they begin estate planning at 50 instead of 70. It’s important to note that this calculation takes the upcoming rule changes to pensions and IHT into account.

Under the upcoming rules, that 20-year difference could amount to an estimated £12.3 billion across affluent UK families. But even under current rules, the same difference would help those families pass on £258,000 more, on average, or £7.9 billion in total.‍ ‍

The report also notes that IHT receipts are rising and are likely to rise further. ‍

In 2025/26, they reached £7.7 billion and they are projected to rise to £14.5 billion by 2030/31. Indeed, advisers cited in the report said they expect more than half of their client base to need estate planning support over the next five years because of the pension changes.

Despite this, many people still start later in life. This is often because they think they are too young, and they may lack urgency or find conversations about death and legacy difficult.

The average age advisers said people should start their estate plan was 44.6. However, most also reported that their typical client starts at 61.

The report in Today’s Wills & Probate notes that of those aged 45 to 49, 86% have done no estate planning at all. Among those in their 50s, the figure is 70%.

As well as the financial cost, there can also be emotional challenges to delaying your estate plan. The report found that around 7 in 10 advisers have witnessed family conflict because of such delays.

So, it’s important to start your estate planning as soon as you can.‍ ‍

3 reasons it’s best to start your estate plan sooner rather than later ‍

The findings in the report clearly show the value of starting your estate planning earlier in life. But what is behind these figures?

1. You can make the most of your gifting strategy

Gifting is one of the simplest ways to reduce the value of your estate for IHT purposes. The main gifting allowance is the annual gifting exemption, which lets you give away up to £3,000 each tax year without it counting towards your estate.

If you didn’t use your allowance in the previous year, you can carry it forward, meaning you can gift up to £6,000 in a single year. Moreover, married couples and civil partners can combine their allowances. Indeed, over 30 years, you and your partner could collectively gift around £180,000.‍ ‍

Anything given outside this allowance and a few other exemptions is typically treated as a Potentially Exempt Transfer (PET). ‍ ‍

PETs don’t incur tax immediately, and if you survive seven years after making the gift, they normally fall outside your estate. If you die within seven years, the gift may be liable for IHT, though taper relief may apply depending on how long you survive. ‍ ‍

So, starting earlier gives PETs a better chance to become fully exempt from IHT while allowing you to provide more immediate support to your loved ones.

2. Certain assets will be eligible for Business Relief

Early planning also helps ensure you are able to benefit from Business Relief (BR). ‍

BR can offer up to 100% IHT relief on certain business assets, but you need to have owned them for at least two years. ‍

As such, if you decide to use BR investments as an estate planning strategy, it’s a good idea to do so early, so you are more likely to reach the minimum ownership requirements.

3. Greater flexibility and less chance of making mistakes ‍

Perhaps most importantly, starting your estate planning early gives you flexibility. ‍

Your financial circumstances, family situation, and legislation are all likely to change over time. A plan created early can be reviewed and adapted as your life and plans evolve, rather than being put together under pressure following illness or other unexpected events.

Moreover, planning early can reduce the risk of costly mistakes. Hurried decisions are more likely to overlook tax liabilities or create unintended consequences, and less likely to reflect your long-term wishes accurately. ‍ ‍

By planning and reviewing your arrangements regularly with a financial planner, you give yourself the best chance of protecting your wealth and ensuring it is passed on as efficiently as possible.‍ ‍

Get in touch‍ ‍

We can work with you to get started on your estate plan or to review and adjust it as necessary if you already have one. We can advise on what strategies to use and show you how much difference starting today could make, rather than delaying another few years.‍ ‍

So, whether you are 40 or 70, it’s never too late or too early to start estate planning, and the sooner you get going, the better. ‍

To speak to a financial planner, get in touch. ‍

Email info@mlpwealth.co.uk or call us on 020 8296 1799.‍ ‍

Please note ‍

This article is for general information only and does not constitute advice. The information is aimed at individuals only. ‍

All information is correct at the time of writing and is subject to change in the future.                                                                                                                                        ‍

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change. ‍

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.