Can Inheritance Tax Be Split Between Siblings? A Complete Guide to Liability, Planning and Fairness

When a parent passes away and leaves an estate to their children, few issues can cause more confusion - or conflict - than Inheritance Tax (IHT). This is especially true when siblings inherit equally, and the tax bill raises the question:

“Can inheritance tax be split between siblings?”

The short answer is: not directly, unless the will or estate arrangements say so.

In the UK, Inheritance Tax is paid by the estate before assets are distributed, so beneficiaries typically receive their inheritance net of tax.

But in some cases - such as lifetime gifts, debts, or when the estate can’t cover the tax - the question of who pays what becomes more complex.

At Belgravia Capital Wealth Management, we’ve helped many families navigate the emotional and financial complexities of inheritance tax - and in this article, we’ll explain how IHT works, who is liable, when siblings may share the tax burden, and how to plan ahead to avoid disputes.

How Inheritance Tax Works in the UK

Inheritance Tax is a tax on the value of a person’s estate when they die. It applies to the total value of all their assets, minus debts and exemptions.

As of 2025, the key thresholds are:

• £325,000 Nil-Rate Band (NRB) — the basic tax-free allowance

• £175,000 Residence Nil-Rate Band (RNRB) - if the deceased leaves their main home to direct descendants

• Combined, this allows up to £500,000 per person - or £1 million for a married couple - to be passed on tax-free

• Anything above this is taxed at 40%

Who Pays Inheritance Tax?

In most cases, Inheritance Tax is paid by the estate, not by the individual beneficiaries. The executor or administrator is responsible for:

• Calculating the estate value

• Submitting IHT forms to HMRC

• Paying the IHT due (usually from the estate’s assets)

• Distributing the remaining estate to beneficiaries

So typically, siblings receive their inheritance net of tax - they don’t have to write a cheque to HMRC themselves.

When Might Siblings Pay or Share IHT?

Although the estate pays the tax in most cases, there are several important exceptions and scenarios where siblings might end up splitting the IHT bill - either by necessity or by agreement.

1. The Estate Doesn’t Have Enough Liquid Assets

If the estate is mostly made up of property or illiquid assets (e.g. antiques, shares in a private business), the executor might not have enough cash to cover the IHT bill upfront.

In this case:

• The beneficiaries may be asked to contribute funds to pay the tax

• Or they may agree to sell assets (e.g. the family home) and then split both the proceeds and the tax liability

This is often where tensions between siblings arise, especially if one sibling wants to keep an asset (e.g. the house) and the other prefers to sell.

2. Lifetime Gifts Within 7 Years of Death

If the deceased gave one sibling a large gift (e.g. £200,000) in the 7 years before death, this could trigger additional IHT if:

• The total gifts exceed the nil-rate band

• The estate cannot cover the additional tax due

In such cases, the recipient of the gift may be liable for the IHT on it - not the estate.

So if one sibling received a large gift while the other didn’t, only the recipient pays tax on that gift. This can create perceived unfairness, especially if the gift wasn’t disclosed or was poorly documented.

3. No Will (Intestacy)

If a parent dies without a will, the estate is distributed according to UK intestacy rules. Siblings may inherit equally (depending on other relatives), but there could be complications if:

• The estate is complex

• One sibling receives more in assets than the other (e.g. a valuable property)

• The estate lacks liquidity to pay IHT

In such cases, siblings might agree to share the tax liability more fairly than the default distribution.

4. Will Provisions Directing Tax to Beneficiaries

Some wills specify that beneficiaries must bear their own share of IHT, especially where:

• Assets are being left unequally

• Different beneficiaries are inheriting different types of assets (e.g. cash vs. property)

• A trust is involved, and the trustees are responsible for tax

In such cases, siblings may each be expected to pay their proportional share of tax based on the value of what they’re receiving.

How Is Inheritance Tax Calculated When Multiple Siblings Inherit?

If the will states that the estate is to be divided equally between siblings, then:

• IHT is calculated on the full value of the estate

• The tax is paid from the estate before distribution

• Each sibling receives an equal net amount, after tax has been settled

But if the estate includes a mix of assets (e.g. cash, house, business shares), it may not be practical to divide everything equally. One sibling may:

• Take the house (and need to pay more IHT if it’s worth more)

• Accept a reduced cash share

• Be liable for capital gains if they sell the asset later

This is where a clear will, proper valuation, and professional advice are essential.

Can Siblings Agree to Split Inheritance Tax?

Yes - siblings can voluntarily agree to split or adjust the tax burden if they all consent. This is often done via:

1. Deed of Variation

A deed of variation allows beneficiaries to change the distribution of an estate within 2 years of death. This can help:

• Equalise tax liabilities

• Redirect assets

• Simplify distributions

• Minimise IHT legally

Example: If one sibling is inheriting a house and the other is getting cash, they might vary the will so both receive equal net value after tax.

2. Informal Agreement

Even without a formal deed, siblings can agree to:

• Share the cost of IHT

• Reimburse one another if the tax paid is unequal

• Adjust how assets are distributed

While not binding on HMRC, this approach can preserve family harmony — but should always be documented in writing.

How to Prevent Disputes Between Siblings

Inheritance can stir up long-standing family tensions — especially if there are questions of fairness or unequal treatment.

To reduce the risk of disputes:

• Parents should make a clear, well-drafted will

• Include explanations or a letter of wishes if distributions are unequal

• Consider using trusts to protect assets and manage distributions over time

• Discuss estate plans openly (if appropriate) to manage expectations

• Appoint a neutral, professional executor if necessary

For siblings:

• Approach inheritance discussions with transparency and empathy

• Consider using mediation if disagreements arise

• Get professional advice before making major decisions about assets or tax

Planning Tips for Parents Wanting to Leave Assets to Siblings

Equalise Gifts During Lifetime

• Gifting to children during life can help balance inheritance values

• Use the £3,000 annual exemption and regular gifts out of income if possible

• Leave Clear Instructions in the Will

  
  

  • Specify how taxes should be paid

  • Be explicit if you want IHT to be shared or borne by specific beneficiaries

  
  

• Use Life Insurance in Trust

  
  

  • A policy can cover IHT without affecting the estate

  • Ensures that beneficiaries receive their full inheritance

  
  

• Consider a Trust Structure

  
  

  • Especially if assets are hard to divide

  • Trustees can manage distributions and ensure fairness over time

  
  

• Get Professional Estate Planning Advice

  
  

  • Reduces costly errors and surprises

  • Can save your estate — and your children — significant tax and stress

  
  

How Belgravia Capital Wealth Management Can Help with Inheritance Tax planning

At Belgravia Capital, we help families and executors:

• Understand inheritance tax liabilities

• Structure estates to reduce or fairly distribute IHT

• Plan lifetime gifts and trusts for multi-generational inheritance

• Navigate disputes or misunderstandings between siblings

• Coordinate with solicitors to implement tax-efficient wills and estate plans

Whether you’re a parent planning your legacy or a sibling managing an inheritance, our team will guide you through each step with sensitivity and precision.

Conclusion: Can Inheritance Tax Be Split Between Siblings?

In most cases, Inheritance Tax is paid by the estate, and siblings inherit what’s left. But when assets are complex, gifts have been made, or the estate lacks liquidity, siblings may need to share or cover IHT costs themselves.

The key to fairness - and family unity - lies in early planning, clear communication, and expert support.

Need help understanding your family’s inheritance tax position - or ensuring a fair outcome for all beneficiaries?

Contact Belgravia Capital Wealth Management at contact@belgraviacapital.co.uk for bespoke estate planning and IHT advice.