Inheritance Tax: Thresholds, Allowances, and How to Pay

Many families assume inheritance tax in the UK only affects the very wealthy. Then a home gets valued, a pension statement arrives, and the numbers look very different from what anyone assumed. The inheritance tax threshold has sat at £325,000 since 2009, while property values have kept moving, so more estates now fall close to the line. 

This guide covers what you pay inheritance tax on, how the nil rate band and other allowances shrink the bill, and where gifts, pensions, homes and farms fit in. It also shows how the amount due is worked out, when HMRC expects payment, and what to do if the money is hard to find. The latest inheritance tax changes are covered too, including what they mean for pensions and farms.

What Is Inheritance Tax?

Inheritance tax is a tax on the estate of someone who has died, which covers their property, money and possessions. Most estates pay nothing because a tax-free allowance covers the first part of the value. The standard inheritance tax rate is 40%, and it applies only to the value above the allowances available.

Extra allowances exist too. The residence nil rate band (RNRB) adds to the tax-free amount when a home passes to direct descendants such as children or grandchildren, and a person’s husband, wife or civil partner usually inherits free of tax. Inheritance tax rules do not change often, and the allowances have been frozen instead of rising with pri

ces. Recent changes have mostly broadened what the tax applies to, including pensions and farms.

Who Pays for Inheritance Tax?

The personal representatives pay inheritance tax, meaning the executors named in a will or the administrators appointed when there is none. They settle the bill from the estate itself, using funds such as the deceased’s bank accounts or the proceeds of sold assets, so the tax is cleared before the beneficiaries receive their shares. Often called a death tax, it is charged on the estate rather than on the people inheriting from it. Trustees take on the same role for assets held in a trust and pay any tax due from the trust’s own funds.

When Do You Pay Inheritance Tax?

In the UK, inheritance tax is due by the end of the sixth month after the person died, so a death on 15 March sets a deadline of 30 September. HMRC charges interest on any tax left unpaid after that date, and as of October 2026 the rate is 7.75% a year. Three things come into play before and around the payment:

• An HMRC reference number, requested at least three weeks before paying.
• The IHT400 account, which reports the estate’s value and is due within 12 months of the death.
• The payment itself, usually made before probate, the legal authority to deal with the estate, is granted.

What Do You Pay Inheritance Tax on?

Inheritance tax is charged on what the person owned at death, mainly property, savings, and investments. Some gifts made in the years before death can also count, but only if the person died within seven years of giving them.

What Is the Inheritance Tax Threshold in the UK?

The inheritance tax threshold in the UK is £325,000 per person, known as the nil rate band (NRB). It belongs to the individual and not the household, so two people have two thresholds. As of October 2026, the threshold for IHT is frozen until April 2031. The residence nil rate band sits on top of it for a qualifying home, but it shrinks by £1 for every £2 of estate value above £2 million. The £2 million point is frozen too.

What Is the Nil Rate Band?

The nil rate band is the first slice of value that inheritance tax treats at a 0% rate, which is why it works as a tax-free allowance. It is transferable, so a share left unused on one death can pass to a surviving spouse or civil partner. Where the person made gifts that count towards the tax in the seven years before death, the band is applied to those gifts first, and the estate receives whatever is left.

Estate Breakdown and Tax Calculation

What Inheritance Tax Allowances and Exemptions Are Available?

Allowances are the amounts each person can pass on at a 0% rate. Exemptions cover recipients and gifts the tax never reaches, however large the sum. The table shows the two main allowances as of October 2026.

Anything left to a spouse, civil partner, charity or community amateur sports club is exempt without limit. Leaving 10% or more of the net estate to charity can also cut the rate on part of the taxable remainder to 36%.

How Does Inheritance Tax Allowance Reduction Affect Estates?

The residence nil rate band is the only allowance that shrinks as an estate grows, and it is measured on the whole estate after debts. At £2.2 million, it drops by £100,000 to £75,000, which adds £40,000 of tax at 40%. It reaches nil at £2.35 million, or at £2.7 million where a transferred residence nil rate band is also available. The standard nil rate band never tapers, although gifts made in the seven years before death can use it up first.

Can You Pass On Unused Inheritance Tax Allowance?

Yes, but only to a surviving spouse or civil partner, and it covers both the nil rate band and the residence nil rate band. The transfer works by percentage, so if the first spouse used 50% of their band, the survivor’s band rises by 50%, from £325,000 to £487,500 at current levels. The claim is made after the second death on Form IHT402 for the nil rate band and IHT436 for the residence nil rate band, within 24 months of the end of the month in which the survivor died. The first death can have happened many years earlier, and unmarried partners cannot use this transfer.

Do You Pay Inheritance Tax on Gifts?

Only in limited cases. A gift is free of inheritance tax if the giver lives for 7 years after making it or if an exemption covers it. The yearly exemptions are:

• £3,000 annual exemption, with one year’s unused amount carried forward.
• £250 small gifts per person, but not to someone who has already received another allowance from you.
• Wedding gifts of £5,000 to a child, £2,500 to a great-grandchild and £1,000 to anyone else.
• Regular gifts from income, with no limit if normal living costs stay affordable.

If the giver dies within seven years, tax applies only to gifts above the £325,000 nil rate band. Gifts made in the last three years are taxed at 40%, and taper relief lowers the rate to 32%, 24%, 16% and 8% for gifts made 3 to 4, 4 to 5, 5 to 6 and 6 to 7 years before death and with no other gifts; a £400,000 gift made four and a half years before death leaves £75,000 above the band, taxed at 24%, which is £18,000. Where gifts in the seven years total more than £325,000, the people who received them can be asked to pay the tax. A record of what was given, to whom, its value and the date makes that calculation far simpler later.

Can a Married Couple Have a £1 Million IHT Allowance?

Yes, but only in the right conditions. Two nil rate bands (£650,000) plus two residence nil rate bands (£350,000) make £1 million, available at the second death. The first spouse’s allowances must have gone unused, the home must pass to children or grandchildren, and the estate must stay below £2 million to keep the full residence element. The residence part cannot exceed the value of the home, and couples who are not married or in a civil partnership cannot combine allowances.

Do You Pay Inheritance Tax on a House?

A house counts as part of the estate, but it often escapes the tax. A home left to a husband, wife or civil partner is exempt, and one left to children or grandchildren can use the residence nil rate band, lifting a single person’s threshold to £500,000. The person must have lived in the home at some point, and it must pass directly to children (including adopted, foster and stepchildren) or grandchildren, not to siblings, nieces, nephews or friends. The allowance is capped at the home’s value, so a £150,000 flat uses only £150,000 of it. Downsizing on or after 8 July 2015 can still protect part of it if assets of similar value go to direct descendants.

Does Inheritance Tax Apply to Pensions?

As of October 2026, most unused pension funds sit outside the estate. For deaths on or after 6 April 2027, most unused pension funds and death benefits will count towards it under the Finance Act 2026. Death-in-service benefits and dependants’ scheme pensions stay outside, and anything passing to a spouse, civil partner or registered charity remains exempt. The date of death decides which rules apply, even if the money is paid later, and the scheme can withhold up to 50% of taxable benefits for up to 15 months and pay HMRC directly.

When is the IHT421 Form Required?

The IHT421 form, also known as the probate clearance form, is an essential document for executors or personal representatives handling the estate of a deceased person in the UK.

Scenarios When the IHT421 Form is Necessary

The IHT421 document is primarily required when the estate of a deceased person exceeds the inheritance tax (IHT) threshold set by HMRC. In the UK, as of 2024, this threshold is generally £325,000, though exemptions may apply depending on the individual’s circumstances, such as property ownership or spousal transfers. If the estate’s value surpasses this limit, inheritance tax will be due, and the IHT421 form must be completed to apply for a grant of probate.

• When IHT is due: If inheritance tax is owed, you must submit the IHT421 form to HMRC as part of the probate process to show that the tax has either been paid or arranged.
• Exemption cases: Even in cases where the estate is below the inheritance tax threshold but probate is required, the IHT421 form must be submitted to HMRC as proof that no IHT liability exists.

Link Between Inheritance Tax and IHT421

The IHT421 form directly links to inheritance tax by serving as an official clearance that the necessary taxes have been settled or accounted for. Before probate can be granted, HMRC must ensure that any applicable inheritance tax has been either paid in full or properly arranged through a payment plan. Once the tax situation is confirmed, HMRC will return the stamped IHT421 form to the executor, who can then proceed with the probate application.

For estates where tax is payable, the IHT421 form helps confirm that the correct inheritance tax form (IHT400 or IHT205) has been submitted and processed and that no further tax liabilities are outstanding.

Timing of Submission about Probate and Estate Handling

The IHT421 document must be submitted to HMRC after completing the inheritance tax return and settling any tax due. Once HMRC processes these forms and confirms that the tax has been paid or arranged, they will issue the stamped IHT421. This stamped document is essential for submitting the probate application, as probate cannot be granted without it. Therefore, submitting the IHT 421 form promptly ensures a smooth and timely probate process, allowing the executor to manage and distribute the estate.

How Do You Pay Inheritance Tax?

You pay inheritance tax to HMRC from the estate’s money, and the person handling the estate has two main ways to do it. They can pay from their own bank account, or a joint account held with the person who died, and claim the money back from the estate once probate is granted. Alternatively, the Direct Payment Scheme lets the deceased’s bank, building society or NS&I account send the tax straight to HMRC. Either way, the HMRC payment reference number must be quoted so the money is matched to the right estate.

Paying personally is fastest through an online or mobile banking app, which is usually instant, while Faster Payments and CHAPS take up to a working day and Bacs about three working days. A cheque sent by post needs up to 10 working days, so it suits payments made well ahead of the deadline.

The Direct Payment Scheme matters most when the person handling the estate cannot pay personally, because it works before probate is granted. The bank first has to accept them as the estate’s representative, and each institution has its own process for that. They then send form IHT423 to each bank, building society or NS&I, using a separate form for every account, and send the IHT400 account to HMRC. Once the money has moved, HMRC sends a code to apply for probate in England and Wales, while Scotland and Northern Ireland use different forms.

When the final figure is not yet known, a payment on account lets the estate pay an estimate before the due date. Interest runs on unpaid tax from that date, so an early payment limits what builds up. Any overpayment is refunded with interest after probate, but the person handling the estate has to write to HMRC to claim it. HMRC does not send a receipt for each payment and writes only once all tax and interest are paid, so bank statements are the proof until then.

Two other routes suit narrower cases. British government stock can pay the bill, but the transfer can take up to four weeks, so it is a poor choice when probate is needed quickly. Yearly instalments over 10 years are available for certain assets that take time to sell, such as a house or shares, and they must be requested on the IHT400, with interest usually charged.

How Much Is Inheritance Tax?

The bill depends on how far an estate sits above its allowances, not on its total value. Anything above that line is taxed at 40p for every £1, so an estate £100,000 over owes £40,000, and one inside its allowances owes nothing. HMRC’s statistics for deaths in 2023 to 2024 put the average bill across taxpaying estates at £231,000, which shows the scale once an estate is well above the line.

How Is Inheritance Tax Calculated?

Inheritance tax is calculated by valuing the estate, taking off debts and funeral costs, removing anything exempt, and then subtracting the allowances that remain. The figure left is the taxable estate, and 40% of it is the tax due. The steps below set out that order in full.

1. Value the Estate:  Add up everything owned at death, including the person’s share of joint assets, using the open market value of each item.
2. Deduct Debts and Funeral Costs: Mortgages, loans, credit cards and unpaid bills come off, along with funeral expenses such as the funeral director, a headstone and refreshments.
3. Remove Exempt Value: Anything left to a spouse, civil partner or qualifying charity drops out, as covered above.
4. Reduce the Nil Rate Band for Gifts: Chargeable gifts made in the seven years before death use the band first, so only the balance is available to the estate. This is how gifts are added back into the calculation.
5. Subtract the Allowances: Take off the remaining nil rate band, plus the residence nil rate band and any transferred allowance where they apply. The result is the taxable estate.
6. Apply the Rate: Charge 40% on the taxable estate, or 36% where the charity rate reduction applies.

Take a single person who leaves a £450,000 home to their children, £200,000 in savings and investments, and £30,000 in a car and possessions. Debts and funeral costs come to £30,000. Two years before death, the person also made chargeable gifts of £50,000, meaning the value left after exemptions. No allowance is transferred from a late spouse, and nothing is left to charity.

The gift itself creates no tax because it sits inside the band, although it uses £50,000 of it. People completing the IHT400 without a solicitor or other probate professional can ask HMRC to work out the tax while filling in the form. Estates with trusts or foreign assets need fuller reporting, so a probate professional is worth considering there.

What Is Included in an Estate for Inheritance Tax in the UK?

An estate covers everything the person owned at death, valued at open market value, before debts and funeral costs come off. The main items are:

• Property, including the person’s share of a jointly owned home
• Savings and investments, including ISAs
• Cars, jewellery and other personal belongings
• Business interests, such as company shares or a partnership stake
• Other joint assets, counted at the person’s share
• Gifts made within the seven years before death
• Foreign assets, where the person was a long-term UK resident

A joint asset still counts at the person’s share even where the survivor takes full ownership automatically. Anyone who was not a long-term UK resident is charged only on assets held in the UK.

What Is Not Included in an Estate?

Life insurance policies written in trust, gifts made more than seven years before death, and most pension funds where death happens before April 2027 stay outside the estate. A policy in trust pays the trustees directly, so the payout never joins the estate. The gifts and pensions sections above explain the seven-year and April 2027 dates.

What Is the Current Inheritance Tax Rate in the UK?

As of October 2026, the standard inheritance tax rate in the UK is 40%. It is charged only on the taxable estate, meaning the value left once the allowances have been taken off, and it stays at 40% however large the estate becomes.

The 40% figure is a headline rate, so it overstates what most taxpaying estates actually pay. HMRC’s latest statistics cover deaths in 2023 to 2024 and were published in July 2026. They show that 4.72% of UK deaths led to an inheritance tax charge, and that these estates paid an average effective rate of 13%. Exemptions and reliefs explain the gap because they remove value before the 40% is applied.

The one standard reduction is the charity rate. Where a gift to charity is at least 10% of the baseline amount, the qualifying part of the estate is taxed at 36% instead of 40%. The baseline amount is broadly the estate value left after debts, reliefs, exemptions and the nil rate band, so it is smaller than the full estate. Because it moves with the estate’s value, a fixed sum can fall short of 10%, and a solicitor can draft the legacy so the test still holds.

What Are the Different UK Inheritance Tax Rates?

Inheritance tax runs at five rates in the UK, although most families meet only the first two. The table shows each rate as of October 2026 and where it applies.

The 20% rate is a lifetime rate, so it is not the final word. If the person who made the transfer dies within seven years, extra tax can become due that brings the total towards the 40% death rate, and taper relief reduces that top-up. Taper relief lowers the tax on gifts rather than creating another rate, and its percentages sit in the gifts section above.

What Is the Nil Rate Band for Inheritance Tax?

The nil rate band is the slice of an estate on which inheritance tax is charged at 0%, and at the time of writing it is £325,000 per person. Anything above it, once other allowances are applied, is taxed at the standard rate. Because the band is frozen until April 2031, rising property and investment values can bring more estates over the line without any change to the rules.

What Are the Current Inheritance Tax Exemptions in the UK?

Exemptions are gifts and legacies that inheritance tax never reaches, however large they are. They differ from allowances because they depend on who receives the value rather than how much is passed on. The spouse, charity and annual gift exemptions are covered earlier, so this section adds the ones people often miss.

Other exempt gifts include those made to qualifying political parties, national institutions such as museums and galleries, and registered housing associations. Payments that maintain a spouse, a child in education, or a dependent relative can also qualify. Each exemption has its own conditions, so a solicitor can confirm a gift qualifies before it is made.

How Long Do You Have to Pay Inheritance Tax in the UK?

You have until the end of the sixth month after the death to pay. The same date applies to tax on lifetime gifts that become chargeable because the giver died within seven years. The deadline stays fixed even when valuations or probate take longer, which is why the options in the payment section matter.

Is There Any Way to Avoid Inheritance Tax in the UK?

Yes, but only through lawful planning, because there is no way to opt out of the tax. Avoidance means arranging your affairs within the rules, for example by using allowances, exemptions and reliefs. Evasion, which means hiding assets or understating the value of an estate, is a criminal offence.

The main limit on planning is the gift with reservation of benefit rule. It keeps a gift inside the estate if the giver still benefits from it, such as by living rent-free in a home they have given away. Schemes that promise to remove a large estate from the tax while leaving you in control deserve caution, since HMRC can challenge arrangements that exist mainly to save tax. A solicitor or regulated tax adviser can confirm what works for a particular estate.

How Can I Reduce Inheritance Tax?

The most direct way to reduce the bill is to claim relief on qualifying business or farming assets, because relief cuts the value that is taxed rather than moving it to another owner. Agricultural property relief covers the agricultural value of qualifying farmland and farm buildings, while business property relief covers assets such as a trading company or a partnership interest. Ownership rules apply, and the usual starting point is two years of ownership for a business, and two years of farming by the owner or seven years of ownership where someone else farmed the land.

Farm inheritance tax has changed, which matters to farmers who assumed their land would pass tax-free. Since 6 April 2026, 100% relief applies only up to a combined allowance for agricultural and business property, and relief above that point is 50%, an effective rate of 20% on the excess. A farm worth more than the allowance can therefore face a bill even though it qualifies for relief.

What Are the HMRC Pension Inheritance Tax Rules for 2027?

For deaths on or after 6 April 2027, most unused pension funds and death benefits will be counted as part of the estate for inheritance tax. Personal representatives, the people dealing with the estate, become responsible for reporting the pension value to HMRC and paying any tax due, using information the pension scheme provides. The change matters most to estates that previously sat below the line only because the pension was outside it.

How to Avoid Inheritance Tax on Pensions?

For deaths on or after 6 April 2027, there is no simple way to keep a pension out of the estate, so planning focuses on how the fund is used and who receives it. Naming a beneficiary on the scheme’s nomination form decides who gets the money but does not change the tax.

The remaining choices are about timing. Drawing on pension funds earlier and spending or gifting the money changes what is left at death. However, withdrawals can be liable to income tax, and gifts follow the usual seven-year and exemption rules covered above. A life insurance policy written in trust can also cover the bill when it arrives, as explained below. Because the effects depend on age, other assets and the size of the fund, a regulated financial adviser is worth consulting before changing how a pension is used.

Can Pension Benefits Be Included in Your Estate?

Yes, for most unused pension funds where death is on or after 6 April 2027, while earlier deaths fall under the current rules, which leave most funds outside the estate. Once included, the fund is valued at the date of death and added to everything else the person owned.

That addition can use up the nil rate band and push the total towards the £2 million point where the residence nil rate band starts to taper. An estate that sat just under £2 million before can therefore lose part of that home allowance as well as paying tax on the pension itself. Benefits that stay outside, such as death-in-service payments and dependants’ scheme pensions, are covered earlier.

What Is the Difference between Estate Tax and Inheritance Tax?

An estate tax is charged on the total value of a person’s estate before it is shared out, while an inheritance tax is charged on what each beneficiary receives. The UK tax is called inheritance tax, yet it works as an estate tax because it is calculated on the whole estate and paid from it before beneficiaries receive their shares.

Estate tax is the term most often used in the United States, where a federal estate tax applies to very large estates. A few US states also charge a separate inheritance tax on recipients, with rates that depend on how closely they were related to the person who died. Anyone reading advice from overseas should check which type of tax is being described, since exemptions and rates do not carry across.

When Do You Have to Pay Taxes on Inheritance?

Inheritance tax is due six months after the person’s death, specifically by the end of the sixth month. The executors or administrators pay it from the estate, not the people receiving the inheritance, which is why shares are often held back until HMRC has been paid. After the deadline, HMRC charges interest on any unpaid balance, currently 7.75% a year.

How to Avoid Inheritance Tax on a Property?

A property can be passed on with little or no inheritance tax through four main routes, and each works best when planned early.

1. Use Tax-Free Allowances and Thresholds: The nil rate band applies to a home like any other asset, and the residence nil rate band adds up to £175,000 when it passes to children or grandchildren. A surviving spouse or civil partner can also add any unused share of both allowances to their own.
2. Make Gifts: A property given to children leaves the estate if the giver lives for seven years, but only if they get no benefit from it, so living there rent-free keeps it in the estate unless full market rent is paid. Gifting a second home or rental property can also trigger capital gains tax on its rise in value, so the two taxes need weighing together.
3. Leave Your Estate to Your Spouse: A property left to a husband, wife or civil partner is exempt without limit, so no tax arises on the first death. The tax is deferred rather than removed, because the survivor’s estate is taxed on the combined value at the second death unless it is planned for.
4. Give to Charity: A property, or a share of its value, left to a registered charity is exempt. A gift of at least 10% of the baseline amount also lowers the rate on the rest, as set out in the rates section.

Which route suits a family depends on who is meant to inherit and how the owner uses the home, so a solicitor can check how the routes combine.

Can a Trust Help Reduce Inheritance Tax?

A trust can help in some situations, but it is not an automatic saving, and it often adds cost and ongoing paperwork. A trust is a legal arrangement in which trustees hold assets for the benefit of others, and assets placed in one generally leave the giver’s estate once seven years have passed, as with other gifts.

Gifts into a bare trust, where the beneficiary is entitled to the assets outright, are treated as ordinary gifts to that person. Gifts into most other trusts are chargeable at once above the nil rate band, and the lifetime and ten-year charges are shown in the rates table earlier. The giver also cannot keep benefiting from the assets, or they stay in the estate. Because trust rules are technical and mistakes are costly, a solicitor should draft any trust used for tax planning.

What Happens if You Pay Inheritance Tax Late?

HMRC charges interest on unpaid inheritance tax, and it builds up daily from the due date until the tax and interest are paid in full. At the time of writing, the rate is 7.75% a year, and it follows the Bank of England base rate, so it can change while the debt is outstanding.

Interest is paid from the estate, which reduces what beneficiaries eventually receive. Personal representatives can also become personally liable for tax that stays unpaid after they have shared out estate assets, so settling the bill comes before distribution. Where the final figure is not yet known, paying an estimate on account stops interest building on that part, as explained in the payment section.

What Happens if You Cannot Afford to Pay Inheritance Tax?

Personal representatives do not have to find the money from their own pockets, because the estate’s own funds can usually be used to pay the tax. Where the estate is mostly bank accounts, the Direct Payment Scheme can send the tax to HMRC before probate, and where it is mostly a house, shares or a business, yearly instalments over 10 years can apply to qualifying assets, usually with interest. Both routes are described in the payment section.

If neither suits, executors sometimes use a short-term loan to bridge the gap until assets are sold. The interest adds to the cost, so it should be compared with the late payment interest HMRC would charge. Contacting HMRC early is sensible if the deadline looks out of reach, since interest keeps running in the meantime.

Can Life Insurance Help Pay Inheritance Tax?

Yes, a life insurance policy written in trust can pay the tax without adding to the estate, and the money is not held up by probate because the insurer pays the trustees directly. Many families use a joint life second death policy for this, since tax between spouses is usually charged only after the second death, which is when the cash is needed.

A policy that is not in trust pays into the estate and can itself be taxed. Premiums can qualify as exempt gifts if they are paid from regular surplus income, as covered earlier, but they rise with age, so the cover is only worth having if its cost stays below the tax it is meant to pay.

How Long Does HMRC Take to Process Inheritance Tax?

HMRC does not process every estate at the same speed, because the time depends on how complex the estate is and how complete the paperwork is. Straightforward estates move fastest, while reliefs, foreign assets, a transferred allowance or errors on the form can all add time. The table sets out what to expect in each scenario.

Processing does not extend the payment deadline, so the tax is still due by the end of the sixth month, whatever stage HMRC has reached. Sending a complete IHT400 with supporting valuations is the most reliable way to avoid delay.

What Are Common Inheritance Tax Mistakes?

The most common inheritance tax mistakes involve timing and paperwork, which makes them easier to prevent than to repair. Six of them account for most avoidable bills.

• Missing the Payment Deadline: Tax is due by the end of the sixth month after death, and interest runs from that date even if probate is still in progress. Paying an estimate on account limits what builds up.
• Undervaluing the Estate: Every asset must be reported at open market value, including smaller items and a share of joint property. Guessing low can lead to extra tax, interest and penalties once HMRC checks the figures, so a professional valuation is worth having for property and business interests.
• Leaving the NRB or RNRB Unclaimed: A surviving spouse or civil partner can inherit any unused nil rate band and residence nil rate band, but the personal representatives must claim them within 24 months of the end of the month in which the survivor died. A missed claim can cost the estate up to £325,000 and £175,000 of tax-free allowance.
• Having No Will: Without a will, intestacy rules decide who inherits, and these differ across the UK. The result can exclude unmarried partners and send assets to people who are not exempt from the tax.
• Keeping No Gift Records: Gifts made in the seven years before death can affect the bill, and the executors must be able to show what was given, to whom, and when. Missing evidence makes exemptions harder to prove and can lead HMRC to treat gifts as taxable.
• Holding a Policy Outside a Trust: A life insurance policy that pays into the estate can itself be taxed, which defeats its purpose. Writing it in trust sends the payout straight to the trustees