Inheritance Tax Insurance – Help & Advice

Nobody likes paying Tax but it is a fact of life and unfortunately, posthumously, it can also be a fact of death.

Thankfully, it can be mitigated in the form of Inheritance Tax Insurance. A simple ‘Whole of Life’ insurance policy can be used to cover the potential tax liability.

We can help you calculate your potential inheritance tax liability and provide a quote for the insurance you need.

If the executor can’t pay the Inheritance Tax, the beneficiaries may have to.

The money generally comes from the deceased person’s estate. However, because the tax must be paid within six months of the death and before the grant of probate can be issued (or grant of confirmation in Scotland), sometimes the executor has to borrow the money or pay it from their own funds.

A life insurance policy can be a way of ensuring there is sufficient money available to pay the inheritance tax bill and therefore leave the entire value of the estate to the chosen beneficiaries.

Estate planning makes good financial sense.

At present the Inheritance Tax allowance stands at £325,000 per person (which can be passed to a spouse giving a total of £650,000) but for estates valued above the allowance the difference is taxed at 40%.

Usually, the executor, personal representative or administrator (for estates where there is no will) pays any Inheritance Tax due.

Fill in the form for an Inheritance Tax insurance quote or call us to discuss your circumstances in more detail.


Optional Questions:

For example:

A single person with an allowance of £325,000 and an estate worth £500,000 will leave £175,000 that is subject to inheritance tax at 40%. The IHT charge will be £70,000.


A couple with a total allowance of £650,000 and a combined estate worth £1,000,000 on the second death will leave £350,000 that is subject to IHT. The 40% charge charge will be £140,000.

If, in the above two situations, the deceased had taken out a life insurance policy for £70,000 and £140,000 respectively, the tax could be paid from the proceeds of the policy and the entire value of the estate would then pass to the chosen beneficiaries.

Whole of Life insurance can provide the required cover.

Whole of Life insurance can provide the required cover until the death of the policy holder (provided all the monthly premiums are paid).

For couples the tax is usually only due on death of the second person so a ‘joint’ policy can be set up that will only pay a claim on the death of the second person.

The value of assets can increase over time so to reduce the affects of this cover can be set up to track inflation.

In order to prevent the proceeds of a claim adding to the total value of the estate and increasing the tax liability the policy should be written into a suitable ‘trust’ which would remove it from the estate and, combined with a Will or Letter of Wishes, ensure the proceeds are distributed in accordance with the wishes of the deceased.

Inheritance Tax is a complicated area and 40% is a lot to pay so getting it wrong can be costly.

Speak to one of our advisers today.