Why landlords are hit hard
Businesses can often pass to the next generation with business relief. Rental property usually can't, because HMRC treats letting as an investment. So a portfolio built up over decades can face inheritance tax at 40% on everything above the allowances, and the allowances are frozen until 2031.
Properties often have to be sold to pay the bill, sometimes quickly and at the wrong time.
Planning takes time. There are ways landlords plan for inheritance tax, but many need years to work. Speak to a specialist. More on inheritance tax at Inheritance Tax Guide.
Frequently asked questions
Is buy-to-let property subject to inheritance tax?
Yes. Rental property is part of your estate and doesn't usually qualify for business relief, because letting is treated as an investment activity.
What are the inheritance tax allowances?
Each person has a £325,000 nil-rate band and, if the home goes to direct descendants, up to £175,000 residence nil-rate band, tapered away on estates over £2 million. Both are frozen until April 2031.
Does a limited company avoid inheritance tax?
Not by itself. Shares in a property investment company are also usually outside business relief. Some structures can help with planning, but they need specialist advice.
Request a call back
Tell us a little about your situation and we'll call you, usually within one working day, to understand what you need. If it would help, we'll then put you in touch with a landlord tax specialist. We'll always tell you who they are before passing on your details. We don't give advice ourselves, and there's no obligation.