Feel You're 'Just Getting By'? You May Still Owe IHT
Nearly half of UK homeowners aged 45 and over describe themselves as "just getting by" financially — yet new research published this week shows their estates average £410,252, well over the £325,000 inheritance tax threshold. The survey of 2,000 homeowners by savings platform Flagstone found that 38% had estimated estates worth £500,000 or more, and 13% were sitting above £1 million. If you've never thought of yourself as someone with an inheritance tax problem, this research suggests you might want to look again.
Why "Comfortable" and "Wealthy" Feel Like Different Things
The disconnect the survey uncovered is a genuinely human one. Being "just getting by" is about monthly cash flow — the mortgage, the bills, the cost of living squeezing what's left at the end of the month. Inheritance tax, by contrast, is assessed on the value of everything you own at death: your home, savings, pensions not already exempt, investments, and possessions, minus debts. It's entirely possible, and increasingly common, to feel financially stretched day to day while sitting on an estate that's grown substantially in value simply because your house is worth far more than when you bought it. The survey found this gap was particularly pronounced among women: 53% described themselves as getting by with little money left over, and 30% had estates worth more than £500,000 — yet only 10% had actually calculated their potential inheritance tax exposure.
How the Inheritance Tax Threshold Actually Works
The nil-rate band — the amount of an estate that passes free of inheritance tax — has sat at £325,000 since 2009 and is frozen until April 2031. There's an additional residence nil-rate band of £175,000 available when a home passes to direct descendants, and married couples or civil partners can combine both allowances between them, potentially shielding up to £1 million as a couple. But for a single person, or anyone whose estate doesn't qualify for the residence allowance, the effective threshold is considerably lower — which is exactly the gap this research suggests many people haven't properly totted up.
Why Understanding Your Estate's Value Matters Now
Flagstone's savings expert Katie Horne put it plainly: taking a step back and looking at your estate as a whole is an important first step, particularly with further inheritance tax changes to pensions due to take effect from April 2027. Once pensions are drawn into the taxable estate, many people who currently sit comfortably under the threshold — or who assumed their pension was separate from the calculation entirely — will find their overall position has shifted. Knowing where you stand today gives you time to plan properly, rather than leaving your executors to work it out under pressure after you've died.
What You Can Do If Your Estate Is Over the Threshold
The starting point is simple: add up what you own, including your home at current market value, and see where you land against the threshold that actually applies to your circumstances. From there, options most people can use include making full use of the £3,000 annual gift allowance, considering charitable donations, and — for couples — checking that both nil-rate bands and both residence nil-rate bands are properly available and will transfer as intended. If your estate is more complex, involving a business, agricultural property, or investments, specialist advice becomes far more important, since recent changes to Business and Agricultural Property Relief mean these assets are no longer automatically shielded in full.
Why a Will Review Should Come Before Anything Else
None of the planning above works properly without an up-to-date will that actually reflects your current estate and family circumstances. If you haven't reviewed yours since buying your current home, since a significant change in its value, or since your family circumstances changed, this research is as good a prompt as any to do so — particularly if, like many of the people surveyed, you've never sat down and worked out what your estate is genuinely worth.
What Should You Do Next?
If you're not sure whether your estate falls above or below the inheritance tax threshold, that uncertainty is worth resolving properly rather than guessing. QualitySolicitors' first contact team can match you with a wills and probate solicitor local to you, who can review your circumstances and help you plan with clarity rather than assumption. Get in touch today to start that conversation.