Senior Tax Manager Lucy Orrow has helped many clients with their Inheritance Tax and Estate Planning enquiries. In this series of Inheritance Tax case studies, we look at a typical scenario for Inheritance Tax and the implications of giving away wealth as a way of reducing the tax liabiliies in the long-term.

Meet Parents Bob and Barbara and their three children…

We were asked to visit a family to discuss their generational Inheritance Tax issues.

This looked at three generations which can enable more scope for planning and potential tax savings in the longer term.

Bob and Barbara are both retired and in ill health but still retained shares in a trading company at which Bob had worked. Their three children, all in middle age, had families of their own.

We were asked how to pass Bob and Barbara’s assets during their lifetime in a tax efficient way

There was also a rental property which they intended to allow one of the grandchildren to live in.

We reviewed their Estates and determined that even with both their Inheritance Tax Nil Rate Band exemptions and Main Residence Relief deductions, a significant Inheritance Tax liability arose.

Our Solution saved over £250,000 in IHT charges

It was agreed that a number of the shares in the trading company would be gifted to the children immediately and those children could determine whether they wished to divert the gift to the grandchildren.  Although this asset was eligible for Business Property Relief in the Estate, it meant that any dividends would no longer pass to Bob and Barbara. These had been be significant in previous years and would add to their capital.

There was also a discussion about moving the rental property into a trust from which the daughter could rent the property and this would enable funds to roll up on a discretionary basis for the other grandchildren.


By doing just these two simple things Inheritance Tax would be saved of £250,000 plus ongoing savings from no longer receiving the dividends.

Our Inheritance Tax Case Studies demonstrate the need to act now to prepare for the future and protect the assets that you have worked hard to create. With a little forward planning, we can ensure that your Estate is left to those you wish to benefit from your hard work.

If you would like us to undertake a review of your Inheritance Tax position, please contact our Senior Tax Manager Lucy Orrow at the Braintree office.

Posted by Lucy Orrow

The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.

Lambert Chapman Chartered Accountants

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