Inheritance Tax Case Study

Posted: 25th March 2022 Key

Let’s have a look at how financial planning can help to reduce an inheritance tax liability when you die.


Jane Smith came to us after her husband, Gerald, sadly passed away unexpectedly. Jane has inherited all of her late husband’s assets, including his beloved classic car. Jane never really liked it herself, noisy, smelly and unbearably uncomfortable! But it was Gerald’s pride and joy.

Because Jane and Gerald were married, Jane pays no Inheritance Tax (IHT) on the assets she inherits from Gerald. However, there could be a hefty bill on Jane’s estate when she dies, something Jane is keen to avoid for her children; Jack (23) and Olivia (21).

Following Gerald’s death, Jane’s estate now adds up as follows:

House (no mortgage) £975,000
Classic Car £50,000
Furniture & Antiques £75,000
Investments* £225,000
Cash in the bank £40,000 emergency fund
Total £1,365,000

*The value of Jane’s investments excludes the value of her pension, and the pension she inherited from Gerald. This is because pensions are generally exempt from IHT.


Jo Radcliffe