Inheritance Tax and Succession Planning in North Wales: Why it’s Important to Act Now.

Inheritance Tax (IHT) was traditionally considered a problem for the very wealthy. In recent years, we’re seeing more farming families, rural landowners, and even ordinary homeowners drawn into the IHT net — largely because of rising property values and the government’s decision to freeze IHT allowances until at least 2028.

As private client solicitors, we increasingly advise local families not just on wills, but on lifetime tax and succession planning — and often, the earlier we’re involved, the better the outcome can be.

North Wales has seen significant growth in property prices, particularly in rural and coastal areas popular with retirees and second-home owners. Even modest farmsteads or family homes near places such as Conwy, Anglesey, and the Llyn Peninsula can now push an estate well over the £325,000 nil-rate band allowance (NRB) — potentially triggering a 40% IHT bill on anything above that allowance, depending on circumstances.

While the residence nil-rate band (RNRB) and transferable allowances can, in theory, shield up to £1m for a married couple, not all families qualify. For example, many farming families pass property down through partnerships or family companies, or they leave assets to non-direct descendants — situations where the RNRB may not apply.

The Importance of Agricultural and Business Property Relief

In North Wales, Agricultural Property Relief (APR) and Business Property Relief (BPR) are especially relevant. However, they’re not automatic — and we often see families assuming they apply, only to discover on closer examination that parts of the estate don’t qualify.

Common pitfalls may include:

• Farmland rented out under non-qualifying arrangements
• Diversified farm businesses that have moved into holiday lets or caravan parks, which may be classed as investment activity, losing BPR, or
• Family businesses where ownership structures or shareholdings haven’t been reviewed for years
• A full review can identify these risks and, in many cases, action can be taken to put things right before it’s too late.

Lifetime Planning: An Underused Tool

Beyond wills and the applicable Inheritance Tax reliefs, lifetime planning is one of the most powerful ways to reduce IHT exposure — but it can take time.

Some key strategies can include:

• Annual gifts (£3,000 per donor – not recipient - per tax year, plus small gifts)
• Regular gifts from surplus income — very useful for those with reliable pension income or rental income
• Larger gifts (Potentially Exempt Transfers - PETs) — potentially exempt after seven years
• Trusts — for families wanting to retain some control over assets while moving value out of the estate

Why Action Should be Taken Sooner Rather than Later

One of the biggest challenges we face is clients waiting until they are older or unwell to seek advice, by which time many planning options are limited. Acting early means:

• There’s time to implement a gifting strategy
• You can review farming or business assets to secure available reliefs, and/or
• Wills can be structured to maximise the relevant allowances

Particularly with farming families, this can also be an opportunity to address succession planning — who will take over the farming business, how siblings can be treated fairly, and how to balance financial and emotional priorities.

Case Studies

We recently helped a farming family restructure land ownership so that all qualifying farmland was held in the right names to secure APR, and set up a partnership agreement to secure a smooth succession to the next generation. Without this, a significant portion of the estate would have subject to IHT.

Another local client, who owned several buy-to-let properties, began a structured gifting plan to reduce IHT exposure and used a discretionary trust to protect vulnerable family members — something they couldn’t have done through a standard will alone.

Conclusion

Rising asset values and frozen IHT allowances mean more families risk paying potentially avoidable inheritance tax. By combining careful will drafting with proactive lifetime planning — including making use of agricultural and business reliefs, annual exemptions, and strategic gifting — families can protect their wealth and ensure it passes efficiently to the next generation.

If you would like to discuss how these issues affect you or your family, we’re here to help. Starting the conversation early can make all the difference.