Inheritance Tax Planning in Camden: Protecting Family Wealth in a Rising Market
- Belgravia Capital
- Jun 2
- 5 min read
With its historic townhouses, buzzing property market, and strong local economy, Camden has become one of London’s most desirable - and valuable - residential boroughs. But with that prestige comes a growing financial risk for local families: inheritance tax (IHT).
Many Camden residents, particularly homeowners and professionals, now find themselves owning estates that far exceed the standard IHT threshold.
Even ordinary families with a home, some savings, and a pension can fall into the 40% inheritance tax bracket without realising it.
At Belgravia Capital Wealth Management, we help Camden families prepare, plan, and protect their estates from unnecessary tax losses.
In this guide, we explain how inheritance tax works in Camden, why local residents are particularly vulnerable, and what you can do to shield your legacy from the taxman.
Why Camden Is a Hotspot for Inheritance Tax Exposure
Soaring Property Prices
Camden is home to some of London’s most desirable neighbourhoods, including Hampstead, Belsize Park, and parts of Primrose Hill.
Many homes in the borough are worth £1 million to £3 million or more - yet the main inheritance tax threshold hasn’t changed in over a decade.
The nil-rate band has been frozen at £325,000 since 2009. Even when factoring in the additional £175,000 residence nil-rate band, most Camden homes push estates well over the £500,000 to £1 million exemption zone, exposing them to tax at 40% on the excess.
Affluent Professionals and Entrepreneurs
Camden is not only popular with long-established families but also professionals, creatives, and business owners with significant assets.
Many own second properties, investment portfolios, or limited companies - all of which can compound IHT liability if not structured carefully.
Underestimated Liability
A large number of Camden homeowners don’t realise they’re exposed to IHT. They assume inheritance tax is only for the wealthy. In fact, many people sitting on a single inherited or bought home now face estate values above £1.5 million, well into the taxable zone.
How Inheritance Tax Works in 2025
Inheritance tax is charged at 40% on the value of an estate that exceeds the tax-free thresholds:
Nil-rate band: £325,000 per individual
Residence nil-rate band: £175,000 (if you pass your main home to direct descendants)
For couples, allowances are transferable, creating a combined £1 million exemption
So if you leave an estate worth £1.6 million and qualify for the full £1 million tax-free allowance, the remaining £600,000 would be taxed at 40% - triggering a £240,000 bill.
And if your estate is worth more than £2 million, you start to lose the residence nil-rate band. By £2.7 million, it disappears entirely, reducing your tax-free allowance and significantly increasing your IHT liability.
Real Example: A Camden Inheritance
A family home in Belsize Park: £2.2 million
Investment portfolio: £400,000
Cash savings: £200,000
Total estate value: £2.8 million
Assuming a married couple with full allowances:
Nil-rate bands: £325,000 x 2 = £650,000
Residence nil-rate bands: reduced to zero due to tapering over £2.7 million
Taxable estate: £2.15 million
IHT liability: £860,000
This tax burden can come as a shock to families who assumed they were secure - especially if the home was bought decades ago for a fraction of its current value.
Strategies for Inheritance Tax Planning in Camden
Gifting to Reduce the Estate Value
One of the most effective ways to reduce IHT is to gift assets during your lifetime.
You can gift up to £3,000 per year (plus any unused allowance from the previous year)
Small gifts of £250 per person per year are also exempt
Larger gifts fall outside your estate after seven years, provided you live that long
In Camden, where family homes represent most of the estate value, gifting cash, shares, or surplus income early can make a dramatic difference in your IHT exposure.
Use of Trusts for Wealth Transfer
Trusts can help you pass wealth to the next generation while retaining control and reducing tax. Camden families often use:
Discretionary trusts to protect children’s inheritance
Bare trusts to pass wealth to adult children with clarity
Interest in possession trusts to support a surviving spouse while ring-fencing wealth for the next generation
Trusts must be carefully set up and managed. We work alongside legal professionals to ensure your trusts are IHT-compliant and strategically designed.
Pension and Life Insurance Structuring
Many Camden residents hold significant value in pensions and insurance policies, but without proper planning, these can swell the estate and increase IHT liability.
Solutions include:
Writing life insurance in trust so the payout doesn’t count toward the estate
Ensuring pensions have clear beneficiary nominations
Using pensions as a tool to pass on wealth tax-free (especially if the pension holder dies before age 75)
Reviewing Business and Investment Relief Opportunities
If you own:
A private business
AIM-listed shares
Commercial property
Land or rental portfolios
…you may qualify for Business Property Relief (BPR) or Agricultural Property Relief (APR). These can reduce IHT by 50% to 100%, but major changes are coming in 2026.
From April 2026, these reliefs will be capped at £1 million, so now is the time to restructure ownership or transfer shares to family while full relief is still available.
Legacy Planning Using Life Insurance
Some families use life insurance to cover the expected IHT bill. This strategy works best when the policy is held in trust and the premiums are affordable.
For example, a Camden couple with a projected IHT liability of £600,000 may take out a joint life second death policy, written in trust, to cover the tax due when both partners pass away. This provides peace of mind that their home won’t have to be sold to cover the tax.
What Happens If You Don’t Plan for Inheritance Tax as a Camden Homeowner?
If no action is taken, your family may face:
A 40% tax bill on the estate’s value above £1 million
Delays in probate due to insufficient funds to pay the tax
Forced sale of the family home or assets
Emotional stress during a difficult time
Inheritance tax can be planned around, but only if you act before it’s too late.
Why Camden Families Need Localised IHT Planning
Every area of London has its own unique tax pressures. Camden stands out because:
Property values exceed the IHT threshold in even modest homes
Estates often include both personal and business wealth
Family structures are complex, often including stepchildren or unmarried partners
Many estates lack updated wills or proper use of exemptions
Our local knowledge of Camden property values, legal dynamics, and family wealth planning gives us an edge in crafting bespoke solutions for clients in NW1, NW3, and surrounding areas.
What You Should Do Now
Step 1: Get a Full Valuation of Your Estate
This includes your home, savings, investments, pensions, life insurance, and business assets.
Step 2: Check if You’re Over the £2 Million Taper Threshold
Losing the residence nil-rate band can add hundreds of thousands to your tax bill.
Step 3: Review or Update Your Will
Ensure it reflects your wishes, includes appropriate trust provisions, and maximises your tax reliefs.
Step 4: Talk to a Professional
The earlier you start planning, the more options you have.
How Belgravia Capital Wealth Management Can Help Camden Residents with IHT Planning
We specialise in inheritance tax planning for Camden families, including:
Detailed estate valuations and IHT forecasts
Lifetime gifting strategies
Trust and legacy planning
Insurance and pension structuring
Business and property tax reliefs
Coordinating with solicitors for effective estate implementation
We tailor every plan to the real circumstances of your life - not just the rules on paper.
Conclusion: Act Now to Protect Your Camden Legacy from Inheritance Tax
Inheritance tax isn’t just a concern for the ultra-wealthy in Camden, it’s a reality for anyone who owns a family home.
But with the right strategy, your estate doesn’t have to lose 40% to the government.
Start early. Be strategic. And work with professionals who understand your needs.
Contact Belgravia Capital Wealth Management today for expert inheritance tax advice tailored to your Camden estate:
Or call us on: 02039165954
