Inheritance Tax Planning in Formby: Protecting Family Wealth in One of Merseyside’s Most Exclusive Communities
- Belgravia Capital
- 1 day ago
- 5 min read
With its coastal setting, leafy avenues, and spacious detached homes, Formby is one of the most desirable places to live in the Liverpool City Region.
But it’s also one of the areas where families face the greatest risk from inheritance tax.
In Formby, property values frequently exceed £1 million - especially along prestigious streets like Victoria Road, Golf Road, and Freshfield Road.
Long-standing residents and newer arrivals alike often find that their estates far exceed the inheritance tax threshold, which has remained frozen for years.
Without careful planning, families in Formby could see 40% of their wealth lost to HMRC - even if that wealth consists mainly of a single, much-loved home.
At Belgravia Capital Wealth Management, we specialise in helping families in Formby and across Merseyside protect their estates from unnecessary inheritance tax. In this guide, we explain the challenges Formby homeowners face and what you can do to preserve your legacy.
Why Inheritance Tax Is a Real Risk in Formby
Inheritance tax may sound like a problem for the ultra-wealthy - but in Formby, that is no longer the case.
The nil-rate band for inheritance tax has been stuck at £325,000 since 2009. If you leave your main home to your children or grandchildren, you can also use the £175,000 residence nil-rate band.
A married couple or civil partners can combine their allowances to pass on up to £1 million tax-free.
But here’s the catch: many detached homes in Formby, especially along its famous “Millionaires’ Row”, are now valued at £1.5 million to £3 million or more. Once an estate exceeds £1 million, inheritance tax is charged at 40% on the excess.
For estates worth more than £2 million, the residence nil-rate band starts to be reduced and disappears entirely by £2.35 million.
That means a large part of many Formby estates ends up being taxed at the full rate, creating six- or even seven-figure tax liabilities.
How Inheritance Tax Works in Practice
Let’s take a typical example from Formby.
Imagine you own a £2.8 million detached home near Victoria Road. You also have £400,000 in savings, £300,000 in investments, and £200,000 in personal possessions, jewellery, and artwork.
Your total estate is worth £3.7 million. As a couple, your combined nil-rate band is £650,000. Because your estate exceeds £2.35 million, you lose the residence nil-rate band entirely - removing an additional £350,000 of tax-free allowance.
This means £3.05 million of your estate would be taxed at 40%, resulting in an inheritance tax bill of around £1.22 million.
Without proper planning, your heirs may be forced to sell the family home or other assets to settle this bill.
Why Formby Families Need to Act Early
In Formby, property values have risen dramatically in the last two decades, but tax allowances have not. The vast majority of estates that include a high-value property will now face some form of inheritance tax.
But this is not inevitable. Early, strategic inheritance tax planning can dramatically reduce the tax your family pays and in some cases, eliminate it altogether.
The key is to plan well before probate, while there is time to take advantage of the many exemptions and reliefs available.
Effective Inheritance Tax Planning Strategies for Formby Families
Lifetime Gifting
One of the most powerful tools to reduce inheritance tax is lifetime gifting. You can gift £3,000 per year tax-free, and also make small gifts of £250 per person.
You can make unlimited gifts of any size and provided you survive seven years, these gifts fall outside your estate for inheritance tax purposes.
Formby families often gift surplus income, cash, investments, or property to children and grandchildren well in advance, reducing their taxable estate and preserving family wealth.
Trusts for Long-Term Control
Trusts allow you to move assets out of your estate while retaining some control over how they are used. They are ideal if you want to:
Protect assets for children or grandchildren until they reach a certain age
Shield wealth from divorce or bankruptcy
Provide income for a spouse while preserving capital for the next generation
Popular structures include discretionary trusts, bare trusts, and interest-in-possession trusts.
Trusts must be carefully set up and managed, but they can deliver major inheritance tax savings for high-value estates like those in Formby.
Life Insurance to Pay the Tax
If you want to avoid your family having to sell property or investments, a whole-of-life insurance policy can provide the solution.
When written in trust, the policy pays out a tax-free lump sum to cover the inheritance tax bill, giving your heirs the liquidity they need to keep your home and assets intact.
Many families in Formby use this strategy to ensure their children or grandchildren can keep the family property rather than facing a forced sale.
Pension Planning
Pensions are a powerful inheritance tax planning tool. If held outside the estate and left to nominated beneficiaries, they can often be passed on free of inheritance tax. For defined contribution pensions, this is especially valuable.
If you die before age 75, pensions can be inherited tax-free. After 75, beneficiaries will pay income tax on withdrawals, but the pension remains outside the taxable estate.
In Formby, where many professionals and business owners hold substantial pensions, using these structures efficiently can make a major difference to your family’s inheritance tax exposure.
Business Property Relief
If you own a qualifying business, shares in certain unlisted companies, or AIM shares, you may benefit from Business Property Relief (BPR), potentially reducing the inheritance tax on those assets by up to 100%.
However, from April 2026, BPR will be capped at £1 million per person - so urgent action is needed now to restructure business ownership or investment portfolios.
Mistakes to Avoid in Inheritance Tax Planning
Many Formby families make the same common errors when it comes to inheritance tax:
Underestimating the value of the estate: Remember to factor in property value, pensions, savings, investments, life insurance, and personal belongings.
Failing to use the residence nil-rate band: A poorly written will or unintended ownership structure could mean you lose this valuable relief.
Leaving gifts too late: The seven-year rule is crucial and gifts made too late in life may not escape inheritance tax.
Holding life insurance outside a trust: If not written in trust, the policy will simply increase the value of your estate and your tax bill.
Ignoring pensions: Many families fail to structure pensions correctly, missing a major opportunity to pass on wealth tax-efficiently.
Why Local Advice Matters
Inheritance tax planning is highly personal and it should reflect the realities of the area where you live.
In Formby, the challenges are specific:
High property values
Asset-rich but sometimes cash-poor estates
Multi-generational property ownership
Estates often exceeding the £2 million taper threshold
Family wealth that includes property, business interests, pensions, and personal items
At Belgravia Capital Wealth Management, we provide bespoke inheritance tax planning tailored to families in Formby and the wider Liverpool City Region.
We understand the local property market, the needs of high-net-worth families, and the most effective ways to structure estates to protect wealth for future generations.
Next Steps for Formby Families when Estate Planning
If you own a home in Formby, particularly in areas like Victoria Road, Golf Road, Freshfield Road, or similar, you are likely already exposed to inheritance tax risk. The sooner you plan, the more options you have to mitigate it.
We recommend:
Getting your full estate valued; including property, pensions, investments, and possessions
Reviewing or updating your will
Considering lifetime gifts and trust planning
Exploring insurance options to cover the tax bill
Reviewing your pension nominations and ownership structure
Taking advantage of Business Property Relief opportunities while they remain generous
Conclusion: Protect Your Formby Legacy from Inheritance Tax
Inheritance tax is not just a problem for the ultra-wealthy. In Formby, owning a single home can easily push your estate into taxable territory.
But with expert planning and early action, you can protect your wealth, keep your family home intact, and pass on the legacy you intended.
At Belgravia Capital Wealth Management, we are ready to help you build an inheritance tax plan that works for you and for your family’s future.
020 3916 5954
