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Martin Lewis IHT Advice & Warnings
MSE Inheritance Tax Review: 07/2025
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Article: Martin Lewis Inheritance Tax IHT MSE Guide / Warnings
In this MSE Martin Lewis Inheritance Tax review we will look at MoneySavingExpert IHT Key Facts 🔸 What's MSE Top Tips on Inheritance Tax? 🔸Does Marriage exempt IHT? 🔸Benefit of Trusts? 🔸IHT Property Allowances? 🔸IHT & Gifts?🔸Probate? 🔸IHT Life Insurance Solutions?
Money Saving Expert IHT Review
Martin Lewis Inheritance Tax Guide
Watch this Martin Lewis Inheritance Tax Podcast IHT review 2024 >>
Firstly, Martin Lewis on INHERITANCE TAX 💯 100% says for those that do have to pay - it can cost their Loved Ones £100,000's when they die; With IHT generating many Billions for the HMRC tax coffers annually.
Although realistically Inheritance Tax Martin Lewis also states it affects just a smaller percentage of total UK estates ie; around one in 25 families or 6% of people generally.
Meaning that 94% of UK estates aren't therefore affected and so NOT having to pay a penny. OR have legally found ways avoiding this particular tax bill, which he comments on.
However, as the Money Saving Expert on Inheritance Tax is also aware - stating these figures may well increase again as governments & politics look to continue these massive revenue raising taxes. For example, drawing into this equation both pensions & farmers estates for any future IHT calculations.
So let's have a look at what ongoing Martin Lewis Inheritance Tax advice recommends here. AND various legal / financial ways the Money Saving Expert how to best help you potentially cut that IHT bill.
Or where Martin Lewis has shared tips explaining how to legally avoid Inheritance Tax and how this may affect you overall, which as financial advisers we also found helpful.
What does Martin Lewis say on Inheritance Tax Rules?
What's Martin Lewis IHT Politics view?
Martin says the politics of Inheritance Tax is still 💯 100% controversial in 2025 to say the least. The UK reportedly has one of the highest IHT rates in the world.
This named tax was first introduced back in 1986; It had then replaced the older capital transfer tax (all which first started as a death duty revenue raising tool - way back in the 1600's).
*Is Martin Lewis FOR Inheritance Tax?
The Money Saving Expert says that those in argument generally for and so in favour of having Inheritance Tax - would say that without it, you may just perpetuate inherited wealth. In other words, the children of the rich = may just still stay rich.
So by having Inheritance Tax - this instead helps to redistribute that income on death, with some of that money going back to the State to then be distributed for the benefit of all - and so not that chosen few.
Martin Lewis & IHT Politics
*OR is Martin Lewis AGAINST Inheritance Tax?
SO is Martin Lewis for Inheritance Tax Avoidance? The arguments against having any Inheritance Tax - The Money Saving Expert would remark is that when your money is earned, then tax is duly paid at the time. So, to have to then pay another tax type on it 'yet again' MSE says isn't deemed as fair.
Plus after years of rocketing UK property prices, many more estates they point out are now being caught automatically - so therefore unable to avoid those Inheritance Tax thresholds (frozen until 4/30).
For example, they remark that more than £8 billion of Inheritance Tax was paid back in the 2024/25 tax year alone.
As a result, Inheritance Tax as always remains high up those various political and social agenda - as often discussed in various MoneySavingExpert IHT forums.
But Money Saving Expert reckons even when your personal retirement pensions on death become subject to Inheritance Tax in 2027/28 tax years, they remark it is still estimated that maybe on average - only 8% of UK estates will likely pay any Inheritance Tax bills?
What does Martin Lewis recommend on Inheritance Tax?
Martin Lewis Inheritance Tax Top Tips
Martin Lewis points out that as Inheritance Tax is a financial fact for some, people are looking for guidance here. So they have shared their best "MSE IHT Top Tips" to help you save money.
OR some great 'Need-to-Knows' to help figure out IF you (or those who maybe inheriting your estate) will pay it; AND if so, how to legally reduce that tax bill.
Firstly, they say if calculating what your estate actually means or worth here - It can include any assets / liabilities you have when you died (eg; Property & Savings or Investments. Businesses and Vehicles.
Plus any payouts from life insurance policies (BUT not setup into trust we would importantly add here which they don't mention - as this may fall outside the estate calculations)
Then MINUS then any debts & liabilities owing on your estate. This will allow you to then calculate your overall estate for any inheritance tax.
So now MSE Martin Lewis explains how to avoid Inheritance Tax - with various key Top Tips and helpful ideas, plus working examples to best help guide you on IHT.
Martin Lewis Inheritance Tax Exempt *MSE Key Facts
Martin Lewis Best IHT 40% Tax Avoidance Top Tips?
1] Your Spouse or Civil Partner (is EXEMPT from IHT)
One main financial marriage benefit Martin Lewis says - is that if the deceased was legally married (or in a civil partnership), then ALL and anything left to their spouse / civil partner will then be 💯 100% exempt from paying Inheritance Tax (and so avoid it).
This rule is the case they point out currently and regardless of the total value of the deceased's estate.
For example, they say even if the deceased had over a £1 million pounds when they died, IF it is all left to their spouse or civil partner, then NO Inheritance Tax will be charged at all.
BUT if anything they don't leave isn't completely left to their spouse / civil partner THEN that might be liable for Inheritance Tax though.
Martin Lewis Inheritance Tax warning here - is this rule DOES NOT APPLY if you're simply cohabiting with your partner (Importantly he says, even if you've lived together for years and have 20 children) or we would add got a legal Power of Attorney for them.
In other words, if you just live with your partner but are not married or not in a civil partnership, any money you leave to them will NOT be exempt from Inheritance Tax.
MSE Inheritance Tax Tips
2] NO IHT paid on the first £325k (Tax Threshold)
MSE says everybody currently gets an Inheritance Tax-Free Allowance upto £325,000 - meaning anything below this estate value pays NO IHT tax (and so avoid it).
SO even if you leave part of your estate to somebody else (ie; other than your spouse or civil partner) THEN they say it's still unlikely you will need to pay any Inheritance Tax.
They point out this is also true if you leave everything over £325,000 to any Charity or a Community Amateur sports club.
To calculate and work out an Estate's value, you will need to add up the value of any assets that deceased person had.
For example for calculating values re Inheritance Tax Money Saving Expert says consider;
- Savings
- Property
- Investments
- Vehicles
- Businesses
- Payouts from Life Insurance policies (we would add IF not in trust)
- Then minus any debts.
If there is any tax to pay, the estate will theoretically be taxed at 40% on anything ABOVE the £325,000 threshold
*OR a lower 36% if at least 10% of the estate, after any deductions, is left to Charity they point out.
Martin say 'theoretically' because, dependant upon your circumstances, there are ways to boost up from this base £325,000 tax-free allowance upto £500,000+...
3] BOOST IHT Allowance upto £500k (Property to Kids/Grandkids)
MSE notes that your Inheritance Tax-Free allowances can also increase upto £500,000. But ONLY for someone who then leaves their main family-owned home ie; main domestic property to just their 'Direct Descendants'.
This list includes either your children (ie; biological, adopted, foster or step kids) or grandchildren. BUT not for extended family like nieces and nephews.
Again, we would add the importance of having valid wills here - helps to ensure this can all happen tax efficiently and without further complications.
Therefore this means as Money Saving Expert says - you will then potentially have 2 Tax-Free allowances before paying any IHT (and so avoid it):
- £325,000: Basic Inheritance Tax-free allowance - that everyone has
- £175,000: 'Main Residence Nil-Rate Band' If your domestic home is worth more
Introduced back in 2017, this £175,000 'residence nil-rate band' is an additional or further tax exempt allowance.
You will receive this ON TOP of the basic £325,000 Inheritance Tax free allowance IF you directly pass on your home (it has to be your main residence) to either your children or grandchildren.
This means Inheritance Tax might not be due on the first £500,000 of your estate (ie; £325,000 + £175,000) BUT all depending on who you leave your home to. So £1 million if your are a couple (which tax free inheritance limit has risen over time)
Martin Lewis Inheritance - 3 Main Residence Need to Knows?
- 1] This Main Residence Allowance of £175,000 ONLY applies to estates worth less than £2 million.
On estates worth £2 million or more, the main residence allowance decreases by £1 (for every £2 above £2 million) So you may lose it entirely if your estate is worth £2.35 million or above.
- 2] Your domestic home won't qualify for the Main Residence Allowance IF it's been placed in a 'Discretionary Will Trust'
This applies even if the trust beneficiaries are either your children or grandchildren ie; 'Direct Descendants'
- 3] What if your home's not worth at least £175,000? The Main Residence Allowance = Equivalent to its Actual Value
For example, if your home's just worth = £150,000 - then your main residence allowance will be just = £150,000 (you wouldn't have an extra £25,000 of allowance to offset against other taxes). Technically as they rightly point out here therefore, it's just an allowance of 'up to' £175,000 – not a flat rate.
So if your home is worth less than this, and it passes to a direct descendant, that main residence allowance would be equivalent to your home's actual value (at the time of your death).
What is Inheritance Tax? - YouTube HMRC
The calculation here of your property being worth less than £175,000 - becomes abit more complicated Martin says if, after you died, your home then passes directly to your spouse if married. Then, after their death, your home passes onto your direct descendants.
In this situation, your spouse would have their own main residence allowance of up to £175,000, BUT also inherit your unused main residence allowance – so a combined allowance of up to £350,000 is now available ie; £175,000 x 2.
Note: that your spouse would inherit the full £175,000 of your unused allowance - even if your home was worth less than £175,000 at the time of your death. So, using their example above, the allowance your spouse inherits wouldn't be capped just at £150,000.
When your spouse dies, their main residence allowance would be equivalent to the lower of £350,000 (ie; their allowance, plus the £175,000 inherited from you) and the value of your home at the point of their death.
So, if your home is worth £250,000 at the time of your spouse's death, their main residence allowance would be = £250,000.
BUT if your property is now gone up in value and worth at £380,000 for example. Then their main residence allowance would now still be capped at £350,000.
Claim 'Main Residence IHT Allowance' if NOT Married?
Yes, MSE Martin points out you will still qualify for the £175,000 Main Residence allowance - regardless of whether you are either married, civil partnered, co-habiting or single.
This all works financially however for Inheritance Tax - ONLY so long as you leave your home to a 'direct descendant' ie; children or grand children (and your estate is worth less than £2 million).
However, Martin Lewis Inheritance warning here remarks that co-habiting couples can't just transfer their unused allowances between themselves.
So co-habiting couples can't therefore get a combined main residence allowance of £350,000 - because they are not legally married.
MoneySavingExpert gives a helpful example on how IHT calculations work...
IF your estate is worth at death £525,000. This amount calculated includes a home valued at £200,000 (which you plan to leave directly to your children).
So this means currently NO Inheritance Tax will be charged on that first £500,000 (ie; £325,000 basic IHT allowance + £175,000 main residence allowance).
There will however now be a 40% IHT charge on that £25,000 above £500,000. This means £10,000 in Inheritance Tax is now due (presuming you are not leaving any money to charity).
However, what happens IF you decide you don't want to leave your main home to your direct descendants ie; kids or grandkids?
Well, there is nothing to pay on that first £325,000. BUT now 40% tax is payable on the remaining £200,000 above this (Meaning an Inheritance Tax bill of £80,000).
4. ANY Unused IHT Tax Allowance (Passes onto Spouse)
As Martin explained, ANY assets left to a spouse or civil partner are exempt from Inheritance Tax. Yet he says that the Inheritance Tax perks for married couples don't end there...
On top of this, your spouse's Inheritance Tax allowance rises by the percentage of your allowance that you DIDN'T use.
So this means a married couple can leave up to £1 million tax-free from IHT (and so avoid it) ie; 2 x £325,000 tax-free IHT allowances + 2 x £175,000 Main Residence allowances.
The Money Expert says this can sound complicated, so they give an unused IHT example to explain further...
MSE Example: IHT Married Case Study
Mr and Mrs Youngatheart have Assets between them worth around £1 million.
Mr Y dies in summer 2025 – leaving everything to his wife Mrs Y. So his £325,000 tax-free allowance is transferred to her, as well as his £175,000 main residence allowance.
This means Mrs Y has up to £1 million in tax-free allowance: her allowances, plus the unused allowances from her husband. Martin Lewis explains this example further in this tiktok video below.
To activate this unused IHT allowance, they point out the executors of your will would need to send certain documents to HM Revenue & Customs (HMRC) within 2 years of their death – see current HMRC's guidelines.
Martin Lewis: Marriage & Inheritance Tax
Martin Lewis Marriage IHT Advantages?
In one of Martin's money marriage blogs - he points out again in 9 Financial Benefits to Getting Married review - One being: Your spouse won't pay inheritance tax on anything you leave them.
When you die, any money, property or assets left to your spouse is automatically exempt from inheritance tax. So whatever you leave them, there is no tax to pay on that.
What if my Spouse died years ago?
These Inheritance Tax rules can be backdated the Money Saving Expert confirms – so will apply EVEN if your spouse or legal partner died years ago.
The key to what extra allowances you get ALL relies on the overall percentages (not amount) of the allowance your spouse used.
For example, they say if your spouse died in 2012 and had just used 50% of their basic Inheritance Tax allowance, you will then get an extra 50% of that current allowance (ie; 50% of £325,000) added onto your own basic Inheritance Tax allowance.
In addition, you would also get 100% of their main residence allowance of £175,000, which your spouse wouldn't have used because that exemption didn't exist back in 2012.
The full main residence allowance is available for transfer unless that persons estate was worth more than £2 million (at which point the main residence allowance starts to reduce).
As he explains, these extra allowances will then be ontop of your own allowances.
The Money Expert also says this can sound confusing, which as financial advisers we agree - so they give an example to explain unused IHT married allowances upon death abit further...
MSE Example: Unused IHT Case Study
Mr Youngatheart passes away some years before Mrs Youngatheart, back in summer 2002 when the basic Inheritance Tax allowance was only £250,000.
He gave £50,000 to each of his 3 children when he died ie; £150,000 total – BUT more importantly here only used up just 60% of his total allowances as available back then. The rest of his estate all went to Mrs Y.
When Mrs Y dies, as she planned to pass her home to her children, she now has £500,000 free of Inheritance Tax due to her own allowances (ie; £325,000 + £175,000).
But she also benefits from the unused percentage of Mr Y's allowances, which is good news for their children.
He didn't use up 40% of his basic IHT allowance, so Mrs Y now gets another 40% of the current basic allowance now available (£130,000).
Plus she gets 100% of Mr Y's main residence allowance of £175,000 - a IHT benefit that wasn't available when he died.
This means Mrs Y's total tax-free allowance is now £805,000.
Unused IHT allowances – Lost if I Re-Marry?
NO MSE confirms you won't automatically lose it IF you do later decide to re-marry again ie; If you have been widowed and had then inherited all your spouse's unused IHT allowance.
However, unused IHT allowances can only be passed on just the ONCE ie; They would be limited to just inheriting your own unused allowance.
So this practically means if you inherited a spouse's allowance on death - you will not be able to re-pass it on to your new legal partner.
Therefore, their Money Saving Expert review says - please note that any widows or widowers who re-marry AND who want to take advantage of their first spouse's unused IHT allowance - 'should plan carefully'. As brokers, we agree with their sentiments and always say here - never assume.
MSE Example: IHT on Re-Marriage
To help clarify this already confusing area, Money Saving Expert gives an example on Re-Marriage and Inheritance Tax.
John and Diane are both married. Diane sadly dies first, leaving everything to husband John. This also means John now inherits Diane's basic IHT allowance of £325,000.
John later remarries his new wife Karen, but then he dies before Karen does.
John cannot now 'repass' on that unused allowance he had inherited across from his 1'st wife Diane to his 2'nd wife Karen; Because inherited allowances - can only be transferred ONCE.
So instead John can make a lifetime gift of £325,000 to his children. OR alternatively, John could just leave them £325,000 upon his death.
ALL which is covered by the unused IHT allowance he inherited over from his 1'st wife Diane. John leaves the rest of his estate to his 2'nd wife Karen.
Karen meanwhile has her own basic IHT allowance of £325,000. If you now add to that the £325,000 of 'unused IHT allowance' she had inherited now from John (so £650,000 total).
But if you now factor in that gift of £325,000 that John had made to his children (whether that was a lifetime gift or only upon death).
All of these gifts which were covered by the unused IHT allowance he had inherited from his 1'st wife Diane.
So between John and Karen, they now effectively have a basic IHT allowance of £975,000 total ie; £325,000 x 3
John and Karen have decided to also leave their £500,000 home to just John's children.
If you now add in those extra allowances here of their respective 'main residence' bands on their home (£175,000 x 2 = £350,000).
This means both John and Karen's effective IHT-free thresholds now increases upto £1.325 million ie; £975,000 + £350,000.
In conclusion, looking at this Martin Lewis Marriage Inheritance Tax example - by careful and correct inheritance tax planning, ALL these gifts are all made potentially possible upto those tax-free limits - based upon their current understanding of HMRC rules.
Can I Inherit Unused IHT Allowances If NOT Married?
If you and your partner are not married or in a civil partnership, any unused Inheritance Tax allowances or main residence allowances can NOT be transferred between yourselves.
So therefore again Martin Lewis Inheritance Tax warning here say cohabiting couples can't therefore transfer unused allowances between each other, OR get the combined main residence allowance of £350,000.
As MSE points out, this IHT perk is strictly for those legally married or civil-partnered couples.
This means it can be financially more complicated for those unmarried couples, particularly those with any children together, to help reduce any Inheritance Tax liability.
In situations such as these – especially if you've got a large estate – they say it can be worth seeking financial advice, and as professional advisers we agree here.
On that point also (if not married) we suggest you have a read of Martin Lewis's is being married financially worth it? interesting blog.
ANY Inheritance Tax Exemptions?
Rightly MSE says that currently, certain People within professional roles are exempt from Inheritance Tax - IF they died during their active service.
This can include both members and personnel of the armed forces, firefighters, police and paramedics. Plus humanitarian aid workers.
These exemptions will also apply if that person who was injured on active service, then later died as a result of that original injury. EVEN if they are no longer on active service.
Will putting Money & Assets into a Trust reduce IHT?
MoneySavingExpert Martin Lewis Inheritance Tax IHT tip points out there are several different types of trusts available here AND their rules can all vary in relation to Inheritance Tax.
Setting up a trust is one way of managing your assets (eg; savings, properties, investments, etc) on behalf of any beneficiaries (ie; a loved one).
You put some of OR all your assets into a trust. Then a trustee helps manage that trust – according to your specific instructions – on behalf of the beneficiaries.
However, this also allows you to then exercise control over HOW you want your assets used or spent after you died.
Importantly here with regards to IHT, Trusts they say can also be a way of passing on your assets more tax efficiently.
With some trusts you may pay Inheritance Tax on by setting up the trust. Others when that trust has been in existence for 10 years.
And then others if you make any transfers into the trust within 7 years before your death.
Depending on the type of trust you open, he says it MIGHT be possible to reduce how much IHT you need to pay.
OR instead eliminate the bill entirely – the primary reason being because anything placed into a trust may normally remove it from your 'estate'.
Along with allowing you to exercise control over how your assets are used or spent after you die, he says that trusts can also be a way of passing on assets more tax efficiently.
Yet he often rightly points out that IHT is still required to be paid somewhere down the line - and it might be that other types of UK taxes may need to be paid.
This is where Inheritance tax planning can get very complex, so if you are thinking about setting up a trust we agree as brokers like Martin Lewis says - that it is really important to seek specialist legal advice.
They also point you towards finding more information about trusts and Inheritance Tax on Gov.uk.
Martin Lewis recommends ways to cut your IHT Bill?
There are some legal inheritance tax avoidance strategies Martin Lewis on gifting money suggests of reducing any potential IHT bill.
Naturally this applies IF you are one of those few who are more likely to have to pay Inheritance Tax upon your estate, rather than not.
For example, any money or gifts given away during your lifetime can all affect how much Inheritance Tax your estate may have to pay.
Therefore, if you plan to make any gifts that can potentially reduce your Inheritance Tax bills legally - these will fall into 2 main categories:
- Annual Gift Allowances. You can make a number of yearly tax-free gifts.
- 7 years Gift Rule. If you live a further 7 years or more after that gift.
Inheritance Tax Gifting fits the Bill?
For IHT purposes regarding what a GIFT means MSE Martin says that "A gift must be a genuine, unconditional gift that you will not gain from. It's something given to someone without any reservation: no nods, winks or mutual backscratching".
So he says, if any gifts are given over conditionally ie; with strings attached (barring any wedding gift), so with the intention of you receiving something in return, that gift could still be liable for IHT by HMRC.
The biggest most expensive asset he rightly points out is that most people have is their own property, bricks and mortar.
So, Martin Lewis Inheritance Tax IHT remarks IF you are simply then trying to give your own home over to your children - IT won't work for IHT - IF you then just continue to live in it gratis FREE (unless you pay full market rent to them for having it).
MSE *Top 5 IHT Gift Allowances?
*GIFT Allowance 1: £3,000 (annual exemption)
You may currently gift £3,000 per tax year > which does not form part of your estate.
HOWEVER, If you do not use up your full annual exemption in any given tax year, THEN the remainder can be carried forward into the next tax year (but no further than that).
For example, you could carry over the previous tax year's unused £3,000 allowance and then gift away a total of £6,000 tax-free for this year.
The annual exemption can be used either entirely on one person OR split between multiple people (eg; you could gift £1,000 each to 3 different people).
*GIFT Allowance 2: £250 (to anyone/everyone you know)
Gifts of up to £250 per person each year - are currently not subject to IHT. So, he says you could have 12 x grandchildren, and you could gift each of them £250 a year as a birthday present ie; £3,000 total.
These 12 gifts then do not also count towards your £3,000 annual gift exemption – though you can't also combine gifts onto the same person.
So if you've already gifted to person A your £3,000 annual exemption, you couldn't then gift person A - another £250.
IHT Gift Allowances
*GIFT Allowance 3: Wedding Money (upto a limit & person)
You are able to make a money gift totally tax-free to a family member or friend if they are getting married.
BUT there are limits on how much you can currently give them:
- £5,000 to a child
- £2,500 to a grandchild
- £1,000 to anybody else
You can only make one wedding gift annually to that same person. However, you can though make wedding gifts to different people within the same tax year.
For example, if you had two children, you could give each of them up to £5,000 (so up to £10,000 in total) if they were both getting married in that same tax year.
Or instead if you had multiple friends also getting married in the same tax year, you could give each of them up to £1,000 as a wedding money gift.
Wedding gifts can also be combined with your £3,000 annual tax free exemption.
SO Martin Lewis Inheritance Tax IHT tip is it could be both allowances can be used onto the same child who got married all within that same tax year ie; £8,000 total. But not with the £250 small gift allowance.
*GIFT Allowance 4: Money gifted from Income (unaffecting lifestyle)
Regular income (such as that from earnings, pensions and/or dividends) is not treated as an asset for IHT calculations says MSE.
WHY? Because Inheritance Tax Martin Lewis says currently is a tax on your assets not taxable income.
As such, then you can regularly and freely give money away from this income – tax-free ie; ideal for those serious about inheritance tax planning
BUT importantly here so long as doing this IS NOT detrimental to your usual lifestyle so doesn't impact your own standard of living.
In other words, any gifting tax free here - should only be made from your 'surplus' income MSE Martin points out...and so expands more on this topic in their review.
How much Money can you Gift Regularly?
SO to help identify what is classed as 'surplus income', Martin suggests that you should calculate all the income you normally receive in one year and then minus all expenses (mortgage, bills, vehicle-running costs, insurance, etc).
If there's anything left over after that calculation, then that can be considered your surplus income and is the maximum from which you could give away regularly tax-free.
MSE Martin Lewis Inheritance Tax IHT tip suggests - you should seriously consider writing down those calculations you have used to determine your surplus income firstly and then secondly keep the evidence.
The reason being if you died - that will make life considerably easier for your loved ones / executors of your estate all when it comes to them making a claim to HMRC that this type of regular gifting ALL came out of your surplus income.
Do the calculations each year. Then keep the evidence each time, as it is likely your amount of surplus income may well change over time.
Martin Lewis on gifting money here says to get a real flavour for the type of calculations you should keep a accurate record of, rightly points you to review the IHT Government latest form (page 8 of IHT403).
Remember he remarks, for this type of gifting to be 100% 💯 tax-free, you also need to have the intention of doing it all regularly (so ideally, gifting from surplus income at least once a year).
There is no limit or annual amount limits on how much money you can give tax-free, so long as:
- You can afford those payments = after meeting your usual normal living costs.
- You pay this = from your regular monthly income.
Reasons for giving money out of your regular income MSE suggests can include some of these examples:
- Financial support to an Elderly Relative
- Contributing to your child's living costs and their rent
- Covering Tuition fees at university
- Paying into a savings account for a child under 18
Note: MoneySavingExpert Martin Lewis Inheritance Tax IHT tip says for keeping it all tax-free savings - consider a junior ISA or Premium Bonds.
Giving regular money in this way to help avoid IHT into the longer term - can also be combined with your £3,000 annual exemption. SO therefore, it can be potentially used on the same person (but not with the £250 small gift allowance).
Any money you give away from your regular income must they say all follow an established pattern though. For example, you regularly paying towards the rent of a grandchild.
Importantly, it cannot compromise your own overall living standards.
The rules for this type of IHT exemption are or can be complex; So if you plan to give money in this way, it's a good idea to get financial advice on estate planning for UK Inheritance Tax Martin Lewis says and we agree.
*GIFT Allowance 5: Give to Charities (with no limits)
If estate planning in UK then note Martin Lewis Inheritance Tax IHT TIP is ALL Donations or gifts to charity are NOT subject to IHT.
And where a charity donation is equivalent to at least 10% of your estate, any IHT planning or payable elsewhere is then reduced to 36%.
*GIFT Allowance 6: The 7 Years Rule (of survival)
Separate to those various annual or individual gift allowances as described above, another way to help reduce your IHT bill Martin Lewis says is through the special 'seven-year rule' of survival ie; If you survive then this gift can then become what's known as a potentially exempt transfer.
Again reminding you that there’s no Inheritance Tax to pay on gifts between spouses or civil partners. You can give them as much as you like during your lifetime, as long as they are legally married or in a civil partnership with you live in the UK permanently
In simple terms, the seven-year IHT rule currently works as follows:
Any IHT gifts that are given MORE than 7 Years Before your Death - are 100% 💯 NOT liable for Inheritance Tax
Remembering that the seven-year rule gifting can be used in combination with all your other annual gifting allowances.
So taking advantage of one - doesn't automatically mean you then can't use the other he usefully points out ie; ideal for inheritance tax planners.
Likewise your annual gifting allowance won't also reduce - just because you are also using those seven-year gifting rules.
In other words, if you decide to give away a gift during your lifetime (which isn't part of your normal annual allowances) and then live on for another seven years or more, then this gift won't count towards or be within your standard £325,000 IHT allowance.
So Martin Lewis gifting money tips here are that any monies given in the 7 years prior to your death WILL count towards your £325,000 IHT allowance - if you died during that period.
Therefore currently IHT will be charged on the portion of those gifts that is above £325,000 limit. This is on a reducing scale up to a maximum of 40% tax – as the table below shows.
| Years between Gift and Death | Rate of IHT Tax on the Gift |
|---|---|
| 0 to 3 years | 40% |
| 3 to 4 years | 32% |
| 4 to 5 years | 24% |
| 5 to 6 years | 16% |
| 6 to 7 years | 8% |
| 7 or more | 0% |
"7 Years IHT Rule" Example case
To best explain the 7 Years IHT rules - MSE gives you a working example to better understand what does or doesn't count here for exemption.
Sally Saver isn't either married or in a civil partnership when she dies. However, in the nine years before her death, she kindly gave away 3 x significant sums of money:
- £50,000 to her brother, 9 years ago
- £325,000 to her sister, 4 years ago
- £100,000 to her friend, 3 years ago
Firstly, there's no Inheritance Tax to pay on the £50,000 gifted to her brother, as it was given more than seven years ago.
Likewise, there isn't any to pay on the £325,000 she gave to her sister (even though it was given 4 years ago) because this is fully covered by the current Inheritance Tax allowance rate.
However, her friend (not the estate) must now pay Inheritance Tax on the £100,000 given to them 3 years ago (at a rate of 32%) - as this was given by Sally after she'd breached the Inheritance Tax threshold and she didn't survive.
The Inheritance Tax payable on this gift is therefore = £32,000 ie; Her friend must now sadly find the money to help pay the IHT tax due.
At the time of her death, Sally's remaining estate was valued at £400,000.
As there is no Inheritance Tax-free allowance left to use (it all went on those 3 gifts), Inheritance Tax on the remaining estate would be due (at 40%). This would be equivalent to £160,000.
Who has to pay the Inheritance Tax on Gifts?
Normally, Martin Lewis Inheritance Tax IHT says is deducted from the value of an estate and paid to HMRC tax person - BEFORE what is left is passed on to the deceased's beneficiaries.
This process is sorted out by the executors / administrators of that deceased persons estate.
But where IHT is due on a gift specifically, then it is the person given the gift who pays IHT (like the example above).
We would add this becomes more complex if no full record of these gift transactions were properly made OR they lost touch with the person given the gift originally.
Either way, MoneySavingExpert re IHT says you will likely need to liaise with the estate's executors / administrators to work out exactly how much IHT is due.
Be aware IHT bills need paying by the end of the sixth month after the deceased has died.
So for example if they died in January, the IHT bill would need to be settled by the end of July.
More information about when IHT payable is due and how best to pay it - Martin Lewis money inheritance tax tip here naturally points you towards Gov.uk.
Martin Lewis Inheritance Tax on Pensions
Many Pensions can be passed on (some Tax-Free)
Martin Lewis Inheritance Tax Pensions discussions starts by pointing out that saving into a pension is something many people do and often for many decades.
The reason being is that so they will have an income to live off once they retire from working. In that time it's quite possible as he said - for people to save £10,000s, £100,000s or even millions into your pension.
Yet - there is also no guarantee you will spend ALL the money in your pension pot by the time you die.
And as some pensions (or at least elements of them) can be passed on if you died, then it is wise to think about - who you would want to inherit your pension.
So MSE has given some Top Tips on various UK Pension Types:-
- Can you use a pension to pass on your wealth more tax-efficiently (Yes potentially)
- Money Purchase on death (can normally be passed on)
- Salary Schemes on death (are more restrictive)
- Can a Salary Scheme pay out to someone other than a close dependant? (potentially Yes)
- Use 'Expression of Wishes' form (to nominate who you'd like to inherit your pension)
- State Pensions on death (possibly boosted after a spouse/civil partner dies)
- You WON'T pay income tax (if the pension owner died before reaching 75)
- You WILL pay income tax (if the pension owner died after reaching 75)
- Income Tax due on any pension inherited? (it'll be at your own marginal rate)
- How much can I save into my pension each year? (Tax Free Cap limits)
- Can inheriting a pension affect any state benefits? (potentially Yes)
- What happens if I died while deferring my state pension? (check rules before/after 2016)
- IF you've inherited a pension – can the money be passed on again when I die? (Yes)
- Can more than one person inherit a pension? (Check the Provider)
- Does the Provider have to pass on my pension to the person I wanted to inherit? (No legal obligation)
- Can I dispute who should inherit my pension? (Yes Possibly)
- What form helps nominate who I wish to inherit my pension? (Expression of Wishes)
MoneySavingExpert comments - those rules for Pensions and Inheritance tax Martin Lewis says these will all be set to change wef from the 2027/28 tax year.
Although currently, a pensions pot is not subject to IHT at the time you die, pensions WILL then start to form part of a persons estate – meaning martin lewis inheritance tax changes says all pensions will be subject to new IHT rules from 6 April 2027.
Currently, UK Pensions are not subject to IHT, as they do not form part of your estate. And as some people don't pay income tax on an inherited pension, this means inheriting a pension can be completely tax free in some cases.
In reality though, Martin Lewis re inheritance tax on pensions says wef 2027 - only a small number of pensions will actually be hit with IHT charges as a result of this change (he reckons the number is estimated to be in the 10,000s).
The vast majority of pensions will continue to be unaffected by IHT, and many will continue to be inherited tax-free.
Martin Lewis Inheritance Tax Wills
*Martin Lewis Trust Wills
IF you died without having made a will - Martin Lewis on Inheritance Tax Wills and Intestacy issues - says you could be leaving behind 💯 100% significant financial problems for your loved ones.
Yet worryingly, MSE found in their studies that more than half of UK adults don't have a will, or have one that's out of date.
But where there is a will in place, he confirms it can be an important way to protect your family and loved ones: Saving on Inheritance Tax, and also importantly hopefully heading off family disputes about how your possessions should be divided.
A valid UK will can help you to avoid Inheritance Tax, for example, by leaving everything above that current £325,000 threshold directly to your spouse (there is no IHT on money and assets left to a spouse).
If you have NOT made a will then other family members may inherit - but potentially their share is now subject to differing IHT costs payable.
So Martin Lewis trust wills are all drawn up correctly here & MSE has given 3 options guide to making a will - especially if IHT is involved, ideally by ensuring the use of a qualified legal professional;
- Solicitors are regulated (so you'll have more protection if they write your will)
- 'Will-Writing Services' (generally not regulated)
- DIY will (you're basically on your own)
Martin says if you own property overseas, then those countries inheritance laws may be different from the UK's – so bear that in mind when writing a will and seek advice from a local solicitor to that country where in doubt.
Typically Martin Lewis also says 'Death Happens' - so MSE has a useful checklist including mentioning plan early to save on IHT tax costs.
As they repeat on this subject; it may be a complex area, BUT tackle this now with your relatives – as there are plenty of legal ways to help reduce the bill.
*Martin Lewis on Farmers Inheritance Tax?
Martin Lewis Inheritance Tax IHT review does not factually comment specifically on farmers inheritance tax debate at the time of this MSE review - but this may change over time before or beyond April 2026.
BUT the MSE forums are a hot topic on farms inheritance tax either pro-inheritance tax on farms OR against inheritance tax for farmers.
Or discuss looking at Agricultural Property Relief (APR) and the Government now changing the IHT rules.
In the case of agricultural property relief - this now will apply in full to property held for more than 2 years (if farmed by the owner).
However, if the property is rented out, then the minimum holding period to get inheritance tax relief is seven years ie; treated similar time frame as an IHT gift.
Martin Lewis on Probate
Martin Lewis on Probate guide says when a person dies and then leaves either property, money and possessions (known as their 'estate') - then someone now needs to sort out who gets what.
To do this, you need what is known as a 'grant of representation'. This proves your authority to now administer the estate.
What format this takes now depends on whether a valid will was left behind.
- IS a will – the Executor(s) will need to apply for a grant of probate.
- ISN'T a will – next of kin need to apply for a grant of letters of administration.
The process of applying for the grant and the document used to manage an estate is often generically referred to as Probate Martin Lewis says.
Martin Lewis on Probate says it is the same rules for everyone within England, Wales and Northern Ireland.
NOTE: If you live in Scotland, the process is called 'confirmation' and so works a bit differently.
But generally speaking, the executor's job and the process of probate involves:
- Gathering any Assets. ie; money left in bank accounts.
- Settling any Bills and Debts.
- Distributing what ever is left - according to the will.
*Martin Lewis Probate & IHT
Once you know who the executors are (the person authorised to deal with the deceased's property, money and possessions – they need to apply for a document known as a 'grant'. (If there is more than one executor, only one needs to apply.)
This clearly shows you have the right to access funds, sort finances and share out assets. Note: There are rising probate fees to pay.
If the person died after 1 January 2022, the first step in applying for the 'grant' is to check the value of the deceased's estate and use the free Govt online checker tool to find out if inheritance tax (IHT) is likely to be owed?
*Values of the estate is BELOW £325,000
- Everyone currently has a basic IHT Tax-free allowance of £325,000.
- IF the estate is valued at less than £325,000, it'll be classed as an 'excepted estate'
- So you don't need to report this separately to HM Revenue & Customs (HMRC)
- Though you'll still need to report the value as part of your probate application.
*Values of the estate is ABOVE £325,000
- Here you'll need to fill in an IHT400 form and send it to HMRC.
- You'll then receive a letter within 20 working days, which you will you need before applying for probate.
- Note: the 'residence nil-rate band' means their home is left to any direct descendants eg; child or grandchild, IHT might NOT be due on the first £500,000 of the estate
- If this applies, you'll need to fill in an IHT400 form and an IHT435 form.
MSE Money Saving Expert Probate Tips
Where there is Inheritance Tax to pay, Martin Lewis Inheritance Tax IHT advice is that you will need to settle this BEFORE the probate grant is issued to you. You have 6 months from the end of the month in which the person died to do so.
You can defer tax and pay in instalments on some types of assets, including land, some shares and the value of any business owned by the deceased.
If there IS enough money - to cover the amount of IHT / tax due?
- It should be possible to arrange a direct tax payment to HMRC.
- Most UK banks permit this if you send an IHT423 form.
If there ISN'T enough money - to cover the amount of IHT / tax due?
- You will have to pay out of your own pocket (if you can) and then recoup the money from the estate after probate
- OR take a loan from a bank (we would add providing proof of reason to lend you money)
- The loan can then be repaid from the estate after the grant has been issued and assets released.
- If the money is borrowed, an estate that consists mainly of the family home may not have enough cash or other assets to repay it.
- So the family home may have to be sold or mortgaged to do so.
- If you've tried everything but still can't raise enough money, you might be able to apply in 'exceptional' circumstances for help from the Lord Chancellor.
*MSE Martin Lewis Top Probate Tips
- Be Organised: buy a notebook and folders to keep track of everything methodically. You know how you work best, but preparation is key.
- Get Extra Death Certificate copies: The death certificate is an official copy of what is on the death register, it's often needed as proof by companies and financial institutions eg; banks and insurance firms [Typically you'll need about 5 copies].
Martin Lewis Powers of Attorney re IHT?
MSE says that roughly 1 person in the UK develops dementia every 3 minutes.
Yet Martin Lewis on Powers of Attorney - ITV Money Show says it's maybe more important than a will - because relatives cannot then just walk into a bank and access your money, even if it is to pay for your own care.
Unless you have a legal Power of Attorney, loved ones would need to apply through court, which can be both long and costly. So the key is to act early.
BUT we would comment here that like life insurances for IHT - some people may act too late here because of failing mental health issues.
All meaning UK Life Insurers will no longer accept them regarding fully underwritten life insurance cover re IHT planning - as being legally and mentally capable anymore.
Note: we would add as financial advisers - that the Executors for a will may NOT be the same people who may have had Powers of Attorney during that persons life.
Money Saving Expert what to do with Inheritance?
If you have been fortunate to inherit some money - then some people will ask Martin Lewis what to do with inheritance money?
Everyone will naturally have different needs and goals, but one person wanted to know if they should put it towards buying a house or instead investing it.
Naturally, although he is not a qualified financial adviser, he suggests considering they save into a tax efficient Lifetime ISA enabling them to both save and invest tax efficiently.
This subject of Inheritance what to do with it is also a popular topic in their MSE forums.
Martin Lewis Best Inheritance ISA Rates?
If you are married or in a civil partnership, BUT your partner sadly dies - Martin Lewis says you can then inherit a one-off extra ISA allowance on top of the annual £20,000, up to the total amount they had saved in ISAs.
Because - there is no inheritance tax paid between legal partners upon death - Martin Lewis Best Inheritance ISA Rates tip here is their would be no IHT payable on their inherited ISA either.
MSE Martin Lewis says on Cash ISA these are known as 'additional permitted subscriptions' (APS).
You have a few choices here...
- You can simply keep the ISA with that same provider
- Move it to a different provider that accepts APS (not all do)
- OR the ISA goes to someone else but you get the extra allowance.
- To claim your allowance, you'll need to give your late partner's full name, address, date of birth and date of death, your marriage / civil partnership certificate and their national insurance number if you know it.
- Some providers may also require a copy of their death certificate.
The allowance you'll inherit will depend on when your partner died:
- Before 6 April 2018. You'll inherit an allowance equivalent to the total value of your partner's ISAs at the date of death.
- On or after 6 April 2018. You'll inherit an allowance equivalent to the total value of the ISAs once their estate is settled, when their ISAs are closed, or at the third anniversary of their death, whichever is earliest – so any growth in value will be taken into account.
The inherited allowance is available to make use of for 3 years after your partner has passed away, or 180 days after the completion of their estate, whichever is later.
Note: that inheriting the allowance is not the same as inheriting the cash in the ISA – your partner could, for example, leave some or all of their ISA money to someone else.
You'd still get the extra allowance, but would have to fund it with your own savings.
NOTE: If you're not married or in a civil partnership, you won't inherit any extra allowance.
Martin Lewis Capital Gains Tax & IHT?
Whilst discussing Inheritance Tax in another review, MSE also touch upon Capital Gains Tax (CGT).
This one of the least common taxes on income they state, and for many people they say it won't apply.
However, if you sell or give away a certain asset worth currently more than £3,000 - you could have to pay CGT.
Note: Capital Gains Tax MoneySavingExpert says - does not apply for main homes, cars, lottery or pools winnings, among other things.
Each year, individuals have an 'annual exempt amount' that allows them to receive some gains tax-free. Above this, you pay CGT on all gains.
So MSE remind you that Inheritance Tax is a tax on the 'estate' of someone who's passed away. Capital Gains Tax (CGT) is a charge made on capital profits on gifts in this situation.
Beneficiaries are not usually be liable to pay Capital Gains Tax UPON the point of their inheritance.
However, the situation is different if these assets eg; any property or shares are then transferred to them from an Estate.
Later on, if they then sell the property or shares onwards for a profit, they may become liable for Capital Gains Tax at this stage.
Martin Lewis also reminds you that if you for example inherited your 1'st property and then sell it for example to use as a deposit for your own 1'st property, you are now not suddenly classed as a 1'st time buyer for a mortgage.
We would add that - if inheriting a property means you now own 2 properties, you must tell HMRC which property is now your main home (within 2 years).
Also, if you inherited that property held in a trust, you are the ‘beneficiary’ and the trustees are the legal owners. So, HMRC says they are responsible for paying tax on any income the trust receives.
Capital Gains Tax paid at the time of inheritance receipt upfront, rather than paying Inheritance Tax later probably does not make financial sense. ie; 2 tax charges.
Either way as Martin Lewis Inheritance Tax IHT says, please get advice from a professional tax adviser. Note: that need for life insurance cover maybe still required !
Life Insurance to help cover IHT Bills?
The Money Saving Expert says YES, there are various life insurance policies re covering IHT or any lifetime gifts made - which help protect your beneficiaries in the event they may have to pay Inheritance Tax on any gift received from you... In other words, if you died within 7 years of making the gift.
They give 3 examples of this type of life insurance policy - to help protect against Inheritance Tax bills.
Note: 'Gift Inter Vivos' is a type of decreasing lifecover - that helps mirror those IHT tapering relief tax rules over 7 years.
All plans ideally should have guaranteed premiums which he prefers for certainty, rather than reviewable.
However, they also rightly state insurance policies like these should be arranged in such a way that they don't inflate the value of your estate (and any associated IHT bill).
Typically we would add as brokers, the IHT life policy may need to be set up either on - a single life basis eg; Gift Inter-Vivos or alternatively joint life 2'nd death via whole of life cover or term insurance (...rather than 1'st death - although there maybe reasons for setting up this way).
Some of these policies are looked at further in our Martin Lewis on Life Insurance review.
Given that the average life expectancy for men in the UK is currently around 80 and a few years more for women - setting up an appropriate or affordable IHT life insurance in suitable time, maybe harder IF you have any health issues.
Although as MSE says not everyone lives an average life when reviewing Over 50's lifecover re life expectancy.
Importantly, Martin Lewis on Over 50's lifecover is also not a big fan of this no-medicals policy type (unless you have poor health or lifestyle).
However we note, the low levels of lifecover typically offered on over 50's or over 60's plans, will probably not be the answer here to solving any major IHT issues, merely helping perhaps to just cover final expenses costs.
NOTE: as Brokers we find that most people if looking at Life Insurance for Inheritance Tax solutions - may probably be over age 60 or 70.
In the past, they were younger & fitter - so have been used to perhaps paying much lower cost premiums for their mortgage or family life insurances. As such, we say be prepared to pay substantially more in 2025 - for protecting your estate against IHT for your loved ones with lifecover.
Importantly, that getting the right life insurance cover here re IHT - ensures any gifts, estate or legacy protection do what you wanted ie; pass money with maximum certainty.
Martin Lewis always says seek professional advice if unsure - So Life Insurance done incorrectly here could mean an unexpected IHT tax bill surprises and unintended results for their loved ones.
Inheritance Tax Life Insurance MSE Top Tip:
Get your policy 'written in trust' to avoid tax issues
Martin Lewis says if you die with an active life-insurance policy, then that payout can form part of your estate.
Which all could mean he strongly advises - it is then hit with a "huge whack of Inheritance Tax" - BUT we would add maybe unwittingly...
Yet, in many cases Martin points out that it is possible to avoid further IHT tax bills by writing the policy in trust - especially if it is done at the time the life insurance plan is taken out.
If the policy is written in trust, the insurance pays out directly to your dependants.
SO it never becomes part of your estate, which avoids both inheritance tax and often speeds up the payout re probate delays.
*Martin Lewis Top 10 Inheritance Tax Warnings?
- Unmarried Couples CAN'T transfer unused Main Residence allowances
- DON'T pay IHT upon Gifts made from noted Surplus Taxed Income
- Main Residence exemption ONLY applies to 'Direct Descendants'
- Upon Remarriage - unused IHT allowance can only be passed on ONCE
- Life Insurance NOT written in trust may be subject to IHT
- Death within 7 years of a Gift means IHT is possibly payable by the beneficiary
- Pensions will SOON become liable to IHT upon death so express wishes
- A Valid Will can HELP to avoid IHT
- If Married for inherited ISAs then APS rules may apply so NO IHT is payable
- IHT bills need paying by the end of the 6th month AFTER the person died
What is Inheritance Tax? - HMRC YouTube Guide:
Martin Lewis Inheritance Tax IHT Conclusion
First of all for Martin Lewis Inheritance Tax IHT he has offered reassurance and says - try to make sense of the basics yourself (as it's much cheaper).
And consider if you're even impacted by Inheritance Tax in the first place?
If your total assets are worth less than £325,000 (or £650,000 if you're a married couple) you shouldn't pay the tax anyway, so there's little point.
But he says it is also possible to legally plan ahead & thus avoid huge amounts of IHT on your estate, or possibly pay none at all.
SO if you have a large estate, this is where paying for expert legal or tax advice can be well worth it ie; spending £100's to potentially save £10,000s (or more) makes good business sense.
For those with big estates, an independent financial adviser may – depending on their qualification – be able to help (see our Financial advice guide),
but a solicitor or tax accountant is a better bet for more specialised information.
Preferably find one who is a member of the Society of Trust and Estate Practitioners (STEP) – take a look on the STEP and Chartered Institute of Taxation websites.
Who's Martin Lewis IHT Money Saving Expert?
Background: Who is the highly respected Martin Lewis OBE & CBE? He is a very successful Financial Reporter & Money Expert, and the founder of the well known UK consumer website Money Saving Expert.
He also has his own current affairs TV Money Show on ITV. This was all initially broadcast after all the London Olympics back in autumn 2012.
Martin Lewis is now often seen on TV commenting on current financial matters & affairs and BBC podcasts. Or daytime TV like This Morning Martin Lewis being the popular go to person for sound money advice.
In 2012, his popular Money Saving Expert website was also sold to The Money Supermarket.Com group for reportedly £87 million.
Since 2015, Martin Lewis remains executive chairman and in these challenging times - all round UK Consumer Champion & Finance Guru still in 2025.
Some of these Martin Lewis' Money Management books shown - are all therefore well worth a read, especially in this ongoing cost of living crisis.
Martin Lewis MSE Says Beware LIAR Fake Scam AI ads >
This overview on Martin Lewis Guide to Inheritance Tax & IHT Insurance 2025 is not a scam fake or advert re Martin Lewis recommending our own broker services. As you may be aware he & MSE are fully impartial which means never putting his name or face / logo to anything. Yes, they mention individual products and services on their site, but they don't 'support' them. Some Martin Lewis Money video's or images shown may also have some out of date information on them eg; due to the ongoing cost of living crisis. Often these Inheritance Tax MoneySavingExpert articles may no longer be personally updated or written by Martin Lewis himself. MSE do state he oversees site content, especially the MSE weekly email. Naturally, although MSE is an independant website finance allows no advertising nor subscription, it may receive a revenue via 'affiliate links' to what they believe are the top products or providers (which we aren't mentioned)
Life Insurance for Inheritance Tax IHT
Inheritance Tax IHT - Life Insurance Enquiry
NOTE: Any reference made to UK taxation & rates are based on a generic understanding of current legislation and HM Revenue & Customs practices, which can change from time to time.
We suggest you seek more specialist personal IHT guidance surrounding your own legal & financial situation beforehand for individual inheritance tax calculations & estate issues.
Our Broker advice is provided on those appropriate IHT protection products only (once any valuations have already been professionally calculated & detailed.)
*Any comments & views expressed on this IHT Martin Lewis Money Saving Expert review 2025 are for generic information only. They are not personalized advice or necessarily reflect MSE IHT views.
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