When most of us think about investing, we imagine growing our wealth so we can enjoy life today and fund our future plans — retirement, travel, maybe helping the children onto the property ladder. But there’s another side to the story: making sure that what you’ve worked hard for doesn’t disappear into the taxman’s hands when it passes down the generations.

That’s where investments and inheritance tax (IHT) planning can work beautifully together.

Inheritance tax is charged at 40% on estates worth more than the current allowances. For many families — particularly those who own property or have built up sizeable investments — it’s a real issue. Without planning, a large chunk of your wealth could end up going to HMRC instead of your loved ones.

The good news is, your investment strategy can do double duty:

1. Grow your wealth for your own lifetime needs.

2. Reduce the inheritance tax burden for the next generation.

Some examples:

• ISAs: While they’re tax-efficient during your lifetime, they’re still part of your estate for IHT purposes. That means they need careful thought as part of a wider plan.

• Pensions: One of the most powerful tools for IHT planning. In most cases, pensions sit outside your estate, so they can be passed on to beneficiaries tax-efficiently. But (⚠️) from April 2027, changes are coming — pensions will then be subject to inheritance tax in certain circumstances. It’s really important to review your plans before then.

• Business Relief investments: Certain qualifying investments (such as shares in specific trading companies) can be exempt from IHT if held for at least two years. These are higher-risk, but can be very effective in the right circumstances.

• Gifting strategies: Sometimes, the best “investment” is in your family. Making gifts — either outright or into trusts — can move money out of your estate while you’re still around to see it enjoyed.

Good planning is about finding the right balance: making sure you have enough for your own needs and lifestyle, while also thinking ahead about what happens later. There’s no one-size-fits-all answer — everyone’s family, assets and priorities are different.

The rules are complex (and they change, as we’re seeing with pensions). But with the right advice, it’s possible to:

• Protect more of your wealth from inheritance tax.

• Structure your investments to be efficient for you and your family.

• Enjoy peace of mind knowing you’re looking after the next generation.

💬 Final thought

Investments and inheritance tax planning shouldn’t be thought of in isolation. Done together, they can be a powerful way of keeping more of your hard-earned money in the family — while giving you the freedom to live life to the full.

If you want to find out more, do get in touch here

·  Risk warnings 

·  The value of investments, and the income from them, can go down as well as up.

·  You may not get back the full amount you invest.

·  Past performance is not a reliable indicator of future results.

·  The tax treatment of investments depends on individual circumstances and may change in the future.

·  Pensions: Your eventual retirement income will depend on contributions, investment performance, and tax rules at the time

·  ISAs: Tax advantages depend on your personal circumstances and may change.

·  Property/Alternative Investments: The value of property and specialist investments can be harder to sell (illiquid) and may rise and fall in value more sharply.

·  Business Relief / EIS / VCTs: These are higher-risk investments and may not be suitable for all investors. They are often illiquid and tax benefits depend on HMRC rules.

·  Investments should always be considered in line with your risk profile and personal circumstances.

·  You should seek professional advice before making any investment decision.