Inheritance tax (IHT) can significantly reduce the value of a property passed on to your loved ones. For many homeowners in the UK, understanding how to minimise or avoid inheritance tax on a house is crucial for effective estate planning. At Lanop Business and Tax Advisors, we specialise in helping you protect your assets and maximise what you leave behind. Here are five key strategies to legally avoid or reduce inheritance tax on your house.

1. Use the Nil-Rate Band and Residence Nil-Rate Band Allowances

The UK government offers a nil-rate band (NRB) allowance of £325,000 (as of 2025) on inheritance tax, meaning the first £325,000 of your estate is tax-free. Additionally, the residence nil-rate band (RNRB) allows an extra £175,000 tax-free when passing your main residence to direct descendants. Combining these allowances can significantly reduce IHT liability on your home.

Tip: Ensure your will clearly specifies the beneficiaries to utilise these bands effectively.

2. Make Use of Gifts and Potentially Exempt Transfers (PETs)

Gifting your property or portions of it during your lifetime can reduce the taxable value of your estate. Gifts made more than seven years before death are generally exempt from inheritance tax. This strategy requires careful planning, but with expert advice, you can transfer ownership gradually and legally minimise tax exposure.

Important: Consult with Lanop advisors to structure these gifts correctly and avoid unintended tax consequences.

3. Set Up a Trust

Establishing a trust can be an effective way to protect your property from inheritance tax. By transferring ownership to a trust, you can control how and when your beneficiaries receive the property, potentially keeping it outside your taxable estate. Trusts are complex legal arrangements, so professional guidance is essential.

4. Consider Using Life Insurance Policies

A life insurance policy written in trust can provide funds specifically to cover any inheritance tax liabilities. This means your heirs won’t need to sell the house or other assets to pay the tax. While this doesn’t reduce the tax owed, it safeguards your beneficiaries financially.

5. Transfer Property to Your Spouse or Civil Partner

Transfers of assets between spouses or civil partners are generally exempt from inheritance tax. You can pass your house to your partner tax-free, which can then be passed to your children or other heirs using both partners’ allowances. This strategy doubles the amount you can pass on tax-free.

Why Choose Lanop for Inheritance Tax Planning?

At Lanop Business and Tax Advisors, we provide tailored estate planning and tax advice to help you minimise inheritance tax on your property. Our experienced team stays up-to-date with the latest UK tax laws to craft strategies best suited for your unique situation.

Conclusion

Inheritance tax on a house can be daunting, but with smart planning, you can protect your family’s financial future. Utilising allowances, gifting strategies, trusts, life insurance, and spouse exemptions are powerful tools to reduce or avoid IHT legally. Contact Lanop today for expert advice and peace of mind in estate planning.

Ready to protect your property from inheritance tax?
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