Inheritance Tax Planning: 2025 Strategies for High Net Worth Individuals

Inheritance tax planning remains a critical consideration for high net worth individuals and family businesses in 2025, with the nil rate band frozen at £325,000 and the residence nil rate band at £175,000 until 2028. Strategic planning can significantly reduce inheritance tax liabilities while maintaining family wealth and business continuity.

Nil Rate Band Planning

Effective utilisation of the nil rate band and residence nil rate band requires careful planning, particularly for married couples and civil partners. Finance directors of family businesses should consider how business assets qualify for business property relief, potentially enabling tax-free transfers of qualifying business interests.

The interaction between the nil rate bands and various reliefs creates opportunities for sophisticated planning. Finance directors should work with tax advisors to develop comprehensive strategies that maximise relief utilisation while maintaining flexibility for changing circumstances.

Business Property Relief

Business property relief provides 100% or 50% relief from inheritance tax on qualifying business assets, making it a valuable planning tool for family businesses. Finance directors must understand the qualifying conditions, including the minimum ownership period and trading requirements, to ensure relief is available.

Trust Structures

Trust structures can provide effective inheritance tax planning opportunities, though recent changes to trust taxation require careful consideration. Finance directors should evaluate whether trusts remain appropriate for their circumstances and ensure compliance with reporting obligations.

Conclusion

Effective inheritance tax planning in 2025 requires a comprehensive approach that considers individual circumstances, business structures, and family objectives. Finance directors who engage in proactive planning will optimise tax efficiency while preserving family wealth and business continuity.