How Inheritance Tax affects families – and what you can do about it

21 July 2026

Steve has spent a lifetime working hard to look after his family. Like many people, what matters is knowing that everything he’s built will one day support the people he loves most.

But with Inheritance Tax affecting more and more families, that future isn’t always guaranteed. A big portion of what you’ve worked for could end up going elsewhere.

So, as Steve reached retirement and started thinking about the next chapter, he made a decision. He and his wife Tess took time to sit down with an adviser, understand their options, and put a plan in place.

Now, he feels far more confident – knowing he’s done what he can to protect his daughter’s inheritance.

Putting family first

“We only have one child, and we want to provide for her future as best as possible,” says Steve. “I knew Inheritance Tax existed, but I wasn’t really sure about the rules. I agree we should all pay tax – but I want to reduce the burden on my daughter.”

Without a plan, that burden can quickly add up. According to the Office for Budget Responsibility, £61.2 billion is expected to be collected in Inheritance Tax over the next five years. With further rule changes on the horizon, more people are being drawn in.

That growing risk is exactly what prompted Steve and Tess to act.

“I wanted everyone to get the best possible outcome,” he explains. “There are a lot of urban myths out there. Social media is full of so-called experts – I wanted to steer well clear of that.”

The realities of Inheritance Tax

Inheritance Tax is no longer just an issue for the very wealthy. It applies if the total value of your estate goes above certain limits when you die. At a very basic level the limits are:

• £325,000 if you’re single or divorced.
• £650,000 if you’re married, in a civil partnership, or widowed.
• plus an extra £175,000 per person if your home is left to direct descendants.

Anything above that is usually taxed at 40%. And it’s often your loved ones who have to find that money.

‘Estate’ simply means everything you own minus what you owe. Your home. Your savings. Your investments. Even things like jewellery or furniture can count.

And when you add it all up, the total can be surprising.

It’s not fixed either. If your home increases in value, your estate grows with it – meaning you could cross the threshold without even realising. And with pensions set to be included in estates for Inheritance Tax from April 2027, even more families could be affected.

Steve and Tess found themselves in exactly that position.

Like many people, Steve hadn’t focused on Inheritance Tax before. He’d spent years building his career and juggling the day-to-day.

“Life’s busy – it was always something for the future,” he admits. “When you’re working, you tend to have reasons to put things off.”

That changed when he retired this April. For the first time, he had the space to pause and think ahead.

“You’ve got to take the plunge at some point. If there isn’t a good time, the day you retire, then there’s never going to be a good time.”

Turning a plan into action

The former chancellor Roy Jenkins once called Inheritance Tax “a voluntary levy”. He had a point. With the right planning, there are ways to reduce a potential Inheritance Tax bill.

“I’m no expert, that’s for sure,” Steve says. “So I made some initial enquiries with Skipton and got the ball rolling.”

Steve and Tess met with an adviser, who took the time to understand their full financial picture – so they could explore the best options for their circumstances.

“The whole process has been pretty smooth,” Steve says. “It wasn’t quite like going to the dentist, like I was expecting!”

Together, they built a plan for their situation, including setting up a series of trusts designed to gradually move wealth outside of their estate for Inheritance Tax planning purposes.

“We wanted to do it in the most tax-efficient, legal and professional way,” Steve explains. “We did the sums, and this seemed the best option.

“Ultimately, the big benefit is saving a significant Inheritance Tax bill. And it’s really a nice feeling to have everything in place.”

Confidence about the future

Before getting advice, Steve and Tess were on track to leave behind an Inheritance Tax bill running into tens of thousands. Now, with a plan in place, that burden has been reduced – giving them the freedom to focus on enjoying retirement.

And, most importantly, it helps look after their daughter’s future.

“I know I won’t be around to see the benefits, but it’s still worthwhile,” says Steve. “It’s about being as helpful as you can to the people who follow you.

“I was thoroughly impressed. It’s a weight off your mind – it gives you a real sense of wellbeing and tranquillity.”

Having been through it himself, Steve is clear on what he’d say to others.

“Take professional advice.

“A lot of people believe what they see online – but you need proper support.

“People should probably be more concerned about Inheritance Tax than they are. Unless you want to give money to the government, you need to plan.

“I’ve already recommended Skipton’s advice service to others. They’re very specialised and skilled.”

Above all, it’s about removing uncertainty – and doing what you can, while you can, for the people who matter most.

As Steve puts it: “A decision is better than no decision.”

This story is based on a real customer’s experience, with names and some details changed to protect their privacy.