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Inheritance tax and succession · Planning for UK families

Inheritance tax planning with a life policy: the asset that is built to be handed on

A life policy can be written in trust on the day it starts, or given away later without triggering income tax. Money paid to trustees on a death is outside the estate and does not wait for probate. A loan trust freezes the estate at today's value and a discounted gift trust takes part of it out at once; whole-of-life cover in trust can pay whatever bill is left. On its own the policy saves no inheritance tax. The saving comes from the trust and the gift, and from surviving seven years, and each has a cost set out below.

Hypothetical estate: £6m plus a £2m policy

£2,465,000

total inheritance tax with the policy in a discounted gift trust, including a £195,000 entry charge paid by the trustees

£2,996,286

total inheritance tax with the same policy held personally and counted in the estate at 40%

Death 8 years after the plan starts; 4% growth a year; 5% of the premium withdrawn and spent each year in both cases; a 35% discount assumed, not quoted; one nil-rate band of £325,000 and no residence nil-rate band. Every figure can be changed in the calculator below.

By Eldar Edmond Grady, CEO, PPLI.com. Research checked 23 September 2026.

UK inheritance tax law for 2026/27, for a UK-resident individual who is long-term UK resident. Changes that start later are labelled with their start date.

Summary

An investment you own, or one your family already owns

In your estate

A portfolio in your name is in your estate. Everything above the nil-rate bands is taxed at 40% on death, and the family usually has to pay some of the tax before the grant of probate is issued. Moving a portfolio into trust means transferring each holding, and a gift of shares is a disposal at market value for capital gains tax, unless holdover relief under TCGA 1992 s.260 applies.

A policy, placed in trust

A policy is a single asset under a single contract. It can be written in trust from the start or assigned into trust later, and a gift assignment is not a chargeable event, so no income tax arises on the move. Trustees own it, the insurer pays them on proof of death, and a loan trust or discounted gift trust lets you keep an income or your capital while the growth, or a slice of the value, sits outside the estate.

Where the saving comes from

Any inheritance tax saving is made by the trust and the gift; the policy is the asset inside them. Most trusts are taxed under the relevant property rules: 20% on gifts above the nil-rate band, up to 6% every ten years and on the way out. A gift needs seven years to fall out of account, you cannot keep a benefit from what you give, and since 6 April 2025 residence, not domicile, decides who is in scope.

Family situations, and what the policy changes in each

The figures are the calculator defaults: an estate of £6,000,000 plus £2,000,000 to invest, 4% growth a year, 5% a year taken by you where the structure allows it, one nil-rate band of £325,000 and death 8 years later unless a card says otherwise. The policy loses in two of them, and one turns on a rule that changed in April 2025.

You want future growth out of the estate but need your capital back over time

Held directly

The £2,000,000 portfolio stays yours. Whatever it grows to is taxed at 40% on death, together with the rest of the estate.

Inside the policy

You lend £2,000,000 to trustees, who buy the policy. A loan is not a gift, so there is no entry charge (IHTM14317). You take £100,000 a year back as loan repayments. After 8 years £1,200,000 is still owed to you and sits in your estate; the £615,715 of growth belongs to the trust and is already outside it. No seven-year wait applies to the growth.

You want an income for life and an immediate reduction

Held directly

A gift you keep an income from is a gift with reservation, so it stays in your estate (Finance Act 1986 s.102).

Inside the policy

In a discounted gift trust you keep a fixed right to withdrawals, for example £100,000 a year, and give away the rest. The value of the retained right, underwritten on your age and health, never counted as a gift (IHTM20652). At a 35% discount £700,000 leaves the estate on day one and the £1,300,000 gift needs seven years. Total inheritance tax on the defaults falls from £2,996,286 to £2,465,000.

The family needs cash for the tax before probate

Held directly

Inheritance tax is due by the end of the sixth month after death, and some of it usually has to be paid before the grant is issued (gov.uk). The executors may have to borrow, or ask banks to release money directly.

Inside the policy

A whole-of-life policy written in trust pays the trustees, not the estate. The Official Receiver's own guidance lists paying out "without the need to wait for probate" as a reason such trusts exist. The premiums are gifts, often covered by the £3,000 annual exemption or the exemption for normal expenditure out of income (IHTM14231).

You pass part of the policy to an adult child now

Held directly

Giving shares away is a disposal at their market value on the day of the gift, so the gift itself can create a capital gains tax bill for you (gov.uk).

Inside the policy

You assign whole segments as a gift. An assignment that is not for money or money's worth is not a chargeable event, so no income tax arises on the transfer (s.484; HS321). It is a gift to the child that falls out of account after seven years. When the child cashes in, the whole gain since the policy began is taxed at the child's own rate, which may be lower than yours.

Against the policy

You still own the policy personally when you die

Held directly

A portfolio held until death is in the estate at 40%, but there is no capital gains tax on death.

Inside the policy

The policy is in the estate at 40% in the same way. If your death ends it, that death is also a chargeable event, and the gain on the surrender value immediately before death is taxed as your income (IPTM3515). Held personally, the policy does worse than the portfolio it replaced.

Changed in April 2025

You settled an offshore trust while non-domiciled and have now lived here for years

Held directly

Under the old rules non-UK assets settled while you were non-domiciled stayed excluded property indefinitely.

Inside the policy

From 6 April 2025 the trust's non-UK property is excluded only while you, the settlor, are not long-term UK resident (HMRC newsletter, April 2025). A policy inside it is in the relevant property regime once you pass 10 of the last 20 tax years here. Charges on property that was excluded on 30 October 2024 are capped at £5m per ten-year cycle.

How the policy is taxed while it grows, and what happens when it is cashed in, is on the page on tax efficiency. How a trust or a spouse's policy stands against creditors and in divorce is on the page on asset protection.

What reaches the next generation: your numbers

An illustration, not a calculation of your own tax. Every assumption is a field you can change, and the working for the structure you pick is printed underneath with your figures in it. It applies the 2026/27 rules to a single person whose estate passes to children, not to a spouse.

Your estate

One sum, four ways of holding it

Show the working for

Held personallyDiscounted gift trustLoan trustGift to a discretionary trust

The rest of your estateIn pounds, after debts. Held flat over the period to keep the model readable

Amount put into the policyThe single premium. In the loan trust, lent and given as set below

Growth of the policy a year (%)After charges. An assumption, not a forecast

Years from the plan to deathDecimals allowed. Under 7 the gift is still in account; 3 to 7 brings taper relief

Nil-rate band available£325,000 per person, frozen to 5 April 2031. Enter less if earlier gifts used it, more if a spouse's unused band transfers

Residence nil-rate band availableUp to £175,000, only for a home left to direct descendants, and reduced by £1 for every £2 of estate above £2m. Nil for most estates of this size

Discount in the discounted gift trust (%)The insurer's valuation of the rights you keep, which turns on age, health and the withdrawal rate. Use the figure from an actual quote if you have one

Withdrawals or loan repayments a year (% of the amount)Taken by you in the personal, discounted gift and loan cases. Not available from the gift trust

Amount lent in the loan trustThe rest of the premium, if any, is treated as a gift into the trust

Share of the money you take out still unspent at death (%)0 means you spend it all. Anything unspent is back in your estate

Reaches the next generation: Discounted gift trust

£5,278,845

The estate after tax, plus the trust fund of £1,548,845 that passes to the beneficiaries outside your estate.

Inheritance tax, all charges

£2,465,000

Includes the 20% entry charge of £195,000 on the part of the gift above the nil-rate band. You survived the gift by 8 years, so it has left the seven-year window.

Entry charge when the trust is funded	£195,000
Top-up on the gift because of death within seven years	£0
Ten-year charges before death	Not modelled
Inheritance tax on the estate at death	£2,270,000
Policy or trust fund at death	£1,548,845 (outside the estate)
Paid to you during your life	£800,000

On these assumptions the lowest total inheritance tax is in the discounted gift trust row: £2,465,000, against £2,996,286 with the policy held personally. The gift trust gives you nothing back during your life, so compare the paid-to-you column before reading the last one.

All four side by side

Structure	Inheritance tax, all charges	Paid to you in life	Reaches the next generation
Held personally Not included: income tax on the chargeable event gain on death, which would add to the cost	£2,996,286	£800,000	£4,819,429
Discounted gift trust	£2,465,000	£800,000	£5,278,845
Loan trust	£2,750,000	£800,000	£5,065,715
Gift to a discretionary trust	£2,605,000	£0	£6,008,667

The working

Discount (retained rights, outside the estate at once) = £2,000,000 x 35% = £700,000
Chargeable transfer = £2,000,000 - discount = £1,300,000
Entry charge = 20% x (transfer - NRB £325,000) = £195,000, paid by the trustees from the fund
Trust fund at death = (£2,000,000 - entry charge) grown at 4% for 8 years, less your withdrawals of £100,000 a year = £1,548,845
Top-up on death = nil: the gift was made 7 or more years before death
NRB left for the estate = £325,000
Estate at death = other estate £6,000,000 + unspent withdrawals £0 = £6,000,000
IHT on the estate = 40% x (estate - NRB left - RNRB £0) = £2,270,000
Reaches the next generation = estate - IHT + trust fund - top-up = £5,278,845

What the model assumes. The trustees pay the 20% entry charge and any top-up on death out of the trust fund. You made no other gifts in the seven years before the plan, so the whole nil-rate band is available to it. The gift into trust is valued at the premium paid (the floor in IHTA 1984 s.167 for a policy leaving the estate). Ten-year charges are worked at 6% of the fund above the nil-rate band, net of any loan still owed, the rate that applies when the settlor made no other chargeable transfers in the seven years before the trust began; they are not modelled for the discounted gift trust, where the settlor's retained rights have to be valued separately. Exit charges on later distributions (up to 6%) and income tax on gains are left out. The £3,000 annual exemption is ignored. Spent withdrawals are gone in every case, which is why the gift trust, which pays you nothing, can show the largest figure in the last column.

Read the first column first. The discounted gift trust usually wins it at this size because the discount leaves the estate immediately and the top-up on death falls only on the gift, not the discount. Then move the years to 2 and watch the gift structures give back most of their advantage: inside the seven-year window the gift uses up the nil-rate band and is taxed at 40% on death, less what was paid when it was made. Then set the withdrawals to 0 and see how much of the loan trust's benefit came from spending the repayments. Married couples can double the nil-rate bands by each making a gift; the model shows one person.

Estate review

Which trust fits your estate

Send the shape of the estate, how much income you need from the capital, your residence history for the last twenty years and any trusts already in place. We will set out which structure fits, and what it costs in entry and ten-year charges.

How a policy is treated for inheritance tax

There is no inheritance tax relief for life policies as such. A policy is property like any other, and the question is always who owns it.

If you own the policy personally and you are long-term UK resident, it is in your estate and taxed at 40% above the nil-rate bands on your death (gov.uk inheritance tax). You are long-term UK resident once you have been UK resident for at least 10 of the previous 20 tax years (IHTA 1984 s.6A). The nil-rate band is £325,000 and the residence nil-rate band £175,000, both frozen until 5 April 2031 (Finance Act 2026; Budget 2025 OOTLAR Annex A). The residence band applies only to a home left to direct descendants, and it is reduced by £1 for every £2 by which the estate exceeds £2 million (gov.uk residence nil rate band), so it has gone entirely once the estate reaches £2,350,000. A policy you own personally counts towards that £2 million; a policy owned by trustees does not.

A policy is easier to give away than a portfolio. It can be written in trust when it is taken out, so it never enters your estate as an asset you own outright. If you own it already, you can assign it, or some of its segments, by deed of gift. An assignment that is not for money or money's worth is not a chargeable event (s.484; HS321), so no income tax arises on the move, where giving away a portfolio is a disposal at market value for capital gains tax (gov.uk CGT market value), unless holdover relief under TCGA 1992 s.260 applies. And once it is in trust, the trustees are the policyholders: on a death the insurer pays them, and the Official Receiver's guidance names "ensuring the payment of the sum assured without the need to wait for probate" as a reason policies are put in trust (Official Receiver guidance, para 33.54). For a policy on your own life written for your spouse or civil partner or children, Married Women's Property Act 1882 s.11 goes further: the policy creates a trust, and the proceeds do not pass under your will or to your creditors. The inheritance tax treatment depends on the type of trust, and a new trust is normally a relevant property trust. Whether s.11 applies to a policy governed by Isle of Man, Guernsey or Luxembourg law needs checking.

The gift is what counts

Giving a policy away is a transfer of value, and a policy that leaves your estate is valued at no less than the premiums paid less anything already paid out under it (IHTA 1984 s.167). A gift to an individual, or to a bare trust for one, falls out of account if you live seven more years. If you die sooner and the gifts in the last seven years exceed the nil-rate band, taper relief applies: the tax on the gift is charged at 32% for a gift 3 to 4 years before death, then 24%, 16% and 8% (gov.uk gifts; IHTA 1984 s.7). A gift into most other trusts is chargeable when made: 20% on the part above the nil-rate band, and a top-up to 40% if you die within seven years, less the tax already paid (gov.uk trusts and inheritance tax).

Whatever the trust, you must not keep a benefit from what you give. Property given away is treated as still yours unless the donee takes possession and you are excluded from any benefit (Finance Act 1986 s.102). This is the rule that loan trusts and discounted gift trusts are designed around. A loan is not a gift, and a discounted gift trust carves your retained rights out before the gift is made; HMRC accepts that neither is a gift with reservation when set up in the standard way (IHTM14317; IHTM20652).

Five ways to hold the policy in trust

The same offshore policy can sit inside any of these. The choice turns on how much access you need, and whether you can wait seven years.

Structure	What leaves your estate	Your access	Inheritance tax on the trust	Income tax on gains while you live
Bare gift trust	The whole gift, after seven years	None. The beneficiary is fixed and cannot be changed	No entry or ten-year charges; the fund is in the beneficiary's estate	The beneficiary
Discretionary gift trust	The whole gift, after seven years; all growth at once	None	20% entry charge above the nil-rate band; up to 6% at each ten-year anniversary and on exit	You, as settlor
Loan trust	The growth, from the first day. The loan stays in your estate until repaid and spent	Repayments of the loan, on demand	No entry charge on the loan; ten-year charges on the fund less the loan outstanding	You, as settlor
Discounted gift trust	The discount at once; the rest of the gift after seven years; growth at once	A fixed income chosen at the start, for life	Entry charge on the gift less the discount, if above the nil-rate band; periodic charges if discretionary	You, as settlor
Whole-of-life cover in trust	The sum assured never enters it	None; you pay the premiums	None on the premiums if they fall within the gift exemptions	Rarely relevant: a gain on death is measured on the surrender value immediately before death, not the sum assured (IPTM3515)

Sources for the table: IHTM14317 (loan trusts), IHTM20652 (discounted gift trusts), gov.uk trusts and inheritance tax and s.64, s.66 (relevant property charges), gov.uk gifts (gifts and exemptions), IPTM3250 (who is charged on gains in a trust); bare trust assets count in the beneficiary's estate (gov.uk trusts and inheritance tax). The detailed mechanics, including the underwriting behind a discount and the arithmetic of loan repayments, are in loan trusts and discounted gift trusts with an offshore bond.

Trusts holding an investment bond must be registered on HMRC's Trust Registration Service. The exclusion for trusts that hold only protection policies does not extend to bonds used for withdrawals (TRSM23030).

The relevant property regime: what a trust costs to run

Most trusts created in lifetime are taxed as relevant property. The charges are small next to 40% on death, but they come round again every ten years for as long as the trust lasts.

There are three charges. On the way in, 20% when the trustees pay, on the part of the transfers above the nil-rate band. At every tenth anniversary, a charge on the value of the relevant property then, at three-tenths of the effective rate on a hypothetical transfer of it (s.64; s.66), which cannot exceed 6%. On the way out, an exit charge of up to 6% on property leaving the trust (gov.uk trusts and inheritance tax). For a trust whose settlor made no other chargeable gifts, the ten-year charge works out at 6% of the value above the nil-rate band at the time, which is what the calculator uses. With the band frozen until 5 April 2031, growth pushes more trusts above it every decade.

The trustees are the policyholders, so they are the ones who deal with these charges, and they may need to take money out of the policy to pay them. A part surrender to pay a ten-year charge is subject to the ordinary income tax rules on the policy, so it is planned alongside the 5% allowance. Couples commonly create separate trusts so that each uses a nil-rate band.

Residence, not domicile, since 6 April 2025

Inheritance tax now follows long-term residence. A person who has been UK resident for 10 of the previous 20 tax years is in scope on worldwide assets, and keeps that status for between 3 and 10 years after leaving, depending on how long they lived here (IHTA 1984 s.6A). For trusts, non-UK property is excluded property only at times when the settlor is not long-term UK resident, whenever it was settled (HMRC Trusts and Estates Newsletter, April 2025). A family that relied on an excluded property trust holding an offshore policy should check the settlor's residence count now. For property that was excluded property on 30 October 2024, the relevant property charges are capped at £5 million per ten-year cycle (gov.uk policy paper on the £5m cap). The detail, including the table of tails and worked cases, is in inheritance tax on an offshore bond after April 2025; arriving and leaving are covered in moving to, returning to or leaving the UK with an offshore policy.

Changes in April 2026 and April 2027

From 6 April 2026 agricultural and business property relief is 100% on the first £2.5 million of combined qualifying property and 50% above it, with unused allowance transferable between spouses and civil partners, and relief on unlisted shares such as AIM holdings at 50% (gov.uk APR and BPR changes; gov.uk announcement of the £2.5m allowance). From 6 April 2027 unused pension funds and most pension death benefits (death-in-service benefits are excluded) come into the estate (Finance Act 2026, ss.66 to 71; gov.uk policy paper on unused pension funds). Families who kept pension funds untouched as an inheritance tax shelter will need another way to pass capital on, and a trust holding a policy is one of the obvious candidates.

Income tax does not stop at the trust

Putting the policy in trust moves it out of the estate. It does not move the income tax on its gains away from you while you are alive.

When a policy is held on a non-charitable trust you created, the gain on a chargeable event is taxed on you, as settlor, if you are alive and UK resident in that tax year (ITTOIA 2005 s.465). HMRC's guidance reads "settlor" widely, as anyone who provided the money, and the charge is not limited to trusts from which you can benefit (IPTM3250). So a surrender by the trustees of a discretionary trust can land on your tax return. The exception is a bare trust, which is ignored: the beneficiary is taxed.

Once the settlor has died, or is not UK resident, UK trustees are taxed on the gain themselves. Discretionary trustees pay 45% (gov.uk trusts and income tax), and top-slicing relief is not available to trustees (IPTM3820). Trustees can often do better by assigning segments to a beneficiary, which is not a chargeable event, and letting the beneficiary cash them in at their own rate with top-slicing. Withdrawals from a discounted gift trust and repayments from a loan trust come out of the policy as part surrenders, deferred within the 5% allowance and counted in the final gain. How gains are worked out is in chargeable event gains and top-slicing relief.

What the policy does not do

These are the points clients most often get wrong.

It does not remove inheritance tax. Held personally by a long-term UK resident, it is in the estate at 40%, and a death that ends it also brings income tax on the gain. Any saving comes from the trust and the gift, and from living long enough.

The seven-year rule and the relevant property charges still apply. A gift of a policy is a gift like any other. Inside seven years it uses the nil-rate band and can be taxed at up to 40%; inside most trusts it pays up to 6% every ten years.

You cannot give it away and keep the use of it. Access has to be built in at the start, as a loan or as carved-out rights; informal benefit from a trust you funded brings the gift back into your estate.

An offshore trust no longer keeps a long-term resident outside inheritance tax. Since 6 April 2025 what matters is the settlor's residence, wherever the trust or the insurer happens to be.

Nothing about it is hidden from HMRC. The trust is registered, the insurer reports under the Common Reporting Standard, and chargeable event certificates go to the person taxed. See privacy and reporting.

Inheritance tax questions

Does an offshore bond avoid inheritance tax?

No. A policy you own personally is part of your estate and is taxed at 40% above the nil-rate bands if you are long-term UK resident. Inheritance tax is reduced by putting the policy in trust or giving it away, and then only under the ordinary rules: the seven-year rule for gifts, the relevant property charges for most trusts and the rule against keeping a benefit from what you give.

Can I put an existing policy into trust without paying income tax?

Yes, if it is a gift. An assignment that is not for money or money's worth is not a chargeable event, so there is no income tax on the transfer. The gift is still a transfer of value for inheritance tax, and a policy leaving your estate is valued at no less than the premiums paid less anything already paid out (IHTA 1984 s.167).

How does a loan trust reduce inheritance tax?

You lend money to trustees, who invest it in a policy. HMRC accepts that an interest-free loan repayable on demand is not a transfer of value and not a gift with reservation (IHTM14317). The loan stays in your estate, and falls as you take repayments and spend them, while all the growth belongs to the trust from the first day. It freezes the estate rather than reducing it.

What is the discount in a discounted gift trust?

It is the open market value of the rights you keep, normally a fixed series of withdrawals for life. The transfer of value is the amount invested less that value (IHTM20652), so the discount is outside your estate immediately and only the rest needs seven years. The insurer values it by underwriting your age and health; a person in poor health may get little or no discount.

What taxes does a discretionary trust pay?

A 20% entry charge on transfers above the nil-rate band of £325,000, a charge at each ten-year anniversary of up to 6% of the value then held, and an exit charge of up to 6% when property leaves the trust. If the settlor dies within seven years of the gift, the gift is taxed again at the death rate, reduced by taper relief and by the 20% already paid.

Who pays income tax on gains when the policy is in trust?

While the settlor is alive and UK resident, the settlor does, on any non-charitable trust they created, under ITTOIA 2005 s.465. In a bare trust the beneficiary does. After the settlor dies, or becomes non-resident, UK discretionary trustees pay 45% on the gain with no top-slicing relief.

I was non-domiciled and settled an offshore trust years ago. Is it still outside inheritance tax?

Only while you are not long-term UK resident, meaning resident in fewer than 10 of the previous 20 tax years. Since 6 April 2025 non-UK trust property is excluded property only at times when the settlor is not long-term UK resident, whenever it was settled. For property that was excluded property on 30 October 2024, relevant property charges are capped at £5m per ten-year cycle.

How do the April 2026 and April 2027 changes affect this planning?

From 6 April 2026 business and agricultural property relief is 100% only on the first £2.5m of qualifying property and 50% above it. From 6 April 2027 unused pension funds and most pension death benefits (death-in-service benefits are excluded) come into the estate. Both make more estates taxable, and both make lifetime gifts and trusts, including trusts holding a policy, more relevant than they were. The nil-rate bands stay frozen until 5 April 2031.

PPLI.com is not authorised by the Financial Conduct Authority and does not give personal advice. This is general information about UK law, not an invitation or inducement to enter into any insurance or investment contract. Policies issued by insurers outside the UK are not protected by the Financial Services Compensation Scheme.

Sources and authorities

The statutes and HMRC guidance listed here were read as at 23 September 2026 for the tax year 2026/27. Applying them to a particular estate needs that estate’s facts.

gov.uk inheritance tax; gov.uk gifts: rate, nil-rate band, gifts, the seven-year rule and taper relief.
IHTA 1984 s.7: lifetime rate and taper percentages; IHTA 1984 s.6A: long-term UK residence and the tail after leaving.
s.64 and s.66 of IHTA 1984; gov.uk trusts and inheritance tax: entry, ten-year and exit charges.
IHTA 1984 s.167: value of a life policy on a transfer of value.
Finance Act 1986 s.102: gifts with reservation of benefit.
IHTM14317: loan trusts; IHTM20652: discounted gift trusts; IHTM14231: normal expenditure out of income.
gov.uk residence nil rate band: residence nil-rate band and the £2 million taper threshold.
gov.uk paying inheritance tax: payment deadline and payment before the grant.
Official Receiver guidance, para 33.54: policies held in trust paid without waiting for probate.
Married Women's Property Act 1882 s.11: policies for a spouse or children create a trust; the proceeds do not pass under the will or to creditors.
ITTOIA 2005 s.465, s.484, IPTM3250, IPTM3515, IPTM3820, HS321: income tax on gains, gift assignments, trusts and death.
gov.uk trusts and income tax: the trust rate of 45%.
HMRC Trusts and Estates Newsletter, April 2025; gov.uk policy paper on the £5m cap: excluded property trusts and the £5m cap.
Finance Act 2026; Budget 2025 OOTLAR Annex A: frozen nil-rate bands to 5 April 2031 and pensions in the estate from 6 April 2027.
gov.uk APR and BPR changes; gov.uk announcement of the £2.5m allowance: agricultural and business property relief from 6 April 2026.
TRSM23030: registration of trusts holding bonds.
gov.uk CGT market value: gifts valued at market value for capital gains tax; TCGA 1992 s.260: holdover relief on gifts that are chargeable transfers, such as gifts into a relevant property trust.

Last updated: 23 September 2026. Our editorial standards set out how the page was checked and how errors are put right.

Library · 4 articles

UK research on inheritance tax

Residence

Inheritance tax on an offshore bond after April 2025: the long-term residence test

UK research · 2026/27

Trusts

Loan trusts and discounted gift trusts with an offshore bond

UK research · 2026/27

Arriving and leaving

Moving to, returning to or leaving the UK with an offshore policy

UK research · 2026/27

Tax on the gain

Chargeable event gains and top-slicing relief on an offshore bond

UK research · 2026/27

All UK inheritance tax research.

Ask about your own estate

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Author

Eldar Edmond Grady

CEO, PPLI.com

Checked against UK primary sources. The statutes, HMRC manual paragraphs and regulator pages cited are linked in the text so each statement can be read beside its basis.

Last updated: 23 September 2026
Editorial standards

Inheritance tax planning with a life policy: the asset that is built to be handed on

An investment you own, or one your family already owns

Family situations, and what the policy changes in each

You want future growth out of the estate but need your capital back over time

You want an income for life and an immediate reduction

The family needs cash for the tax before probate

You pass part of the policy to an adult child now

You still own the policy personally when you die

You settled an offshore trust while non-domiciled and have now lived here for years

What reaches the next generation: your numbers

All four side by side

The working

Which trust fits your estate

How a policy is treated for inheritance tax

The gift is what counts

Five ways to hold the policy in trust

The relevant property regime: what a trust costs to run

Residence, not domicile, since 6 April 2025

Changes in April 2026 and April 2027

Income tax does not stop at the trust

What the policy does not do

Inheritance tax questions

Sources and authorities

UK research on inheritance tax

Ask about your own estate

Tell us about yourself

How can we help?

Thank you