# Why your family needs to talk about inheritance tax now

> Most families avoid discussing inheritance, but one conversation could save hundreds of thousands in taxes.
- Title: Why your family needs to talk about inheritance tax now
- Summary: Most families avoid discussing inheritance, but one conversation could save hundreds of thousands in taxes. Start talking to your family about inheritance…
- Keywords: inheritance tax, uk tax, family finances, estate planning, nil-rate band, lifetime gifting, hmrc, pension changes 2027, financial planning, wealth transfer, family, needs
- Source: MoneyWeek — https://moneyweek.com/personal-finance/inheritance-tax/inheritance-tax-conversation-cut-bill
- Published: 2026-09-22T08:45:14+00:00
- Read time: 2 min
- Topics: inheritance tax, uk tax, family finances, estate planning, nil-rate band, lifetime gifting, hmrc, pension changes 2027, financial planning, wealth transfer
## Death and taxes hit together
You pay income tax, VAT, stamp duty, capital gains tax, and more during life. Then inheritance tax takes 40% of everything above the threshold when you die.

> Two things in life are guaranteed: death and taxes. Some of us have to deal with both at the same time.
## Only you can plan it
With other taxes, you can adjust your own strategy. With inheritance tax, the person with the money must plan years ahead. You cannot fix it afterwards.

> You cannot fix it afterwards. The bill comes out of the estate, which means it comes out of what would have been yours.
## The conversation is the barrier
Only 30% of over-55s have discussed inheritance with their children. 15% find it awkward, 12% think it's rude. Yet this one uncomfortable conversation determines the tax bill.

> Only 30% of over-55s have ever discussed inheritance with their children, according to research by law firm Irwin Mitchell.
## How much can you pass on
Everyone gets a 325,000 pound tax-free allowance. If your main home goes to children, add another 175,000 pounds. A married couple can pass on up to 1 million pounds tax-free.
## Inheritance comes too late
People born in the 1980s won't inherit until their mid-60s or later. The average expected inheritance is 62,500 pounds, which matters far more at 29 than at 64.
## Frozen thresholds drag more in
The 325,000 pound allowance has been frozen since 2009 and stays frozen until 2031. If it had risen with inflation, it would be worth 555,000 pounds by decade's end.
## Pensions change the game in 2027
From April 2027, most unused pension pots count toward inheritance tax. HMRC estimates 10,500 estates will pay inheritance tax for the first time, with another 38,500 paying roughly 34,000 pounds extra.
## Reframe the conversation
Instead of saying 'let's reduce the tax bill,' ask 'when would this money do the most good?' This shifts the focus to lifetime gifting, which reduces the tax bill naturally.

> Changing the conversation and framing from 'let's reduce an inheritance tax bill' to 'when would gifting this money actually do the most good,' and you're having a completely different conversation.
## Gifts and planning cut the rate
The headline rate is 40%, but the average effective rate paid in 2023-24 was 13%. Every exemption, allowance, and gift was a decision made while someone was alive.
## Talk to your family now
If you expect an inheritance, discuss it with your family. If they're near the thresholds or have pensions, the conversation is urgent. A financial adviser's fee is a rounding error against a 231,000 pound average bill.
## Key takeaway

Start talking to your family about inheritance now. Inheritance tax planning must happen while the person with assets is alive, and the conversation itself is often the biggest barrier.