Inheritance Tax Planning in Richmond: Protecting Estates in One of London’s Leafiest Boroughs
- Belgravia Capital
- 1 day ago
- 6 min read
Richmond upon Thames is a jewel of southwest London. With its grand Georgian mansions, riverside terraces, and tree-lined avenues, it’s no wonder that families who’ve lived here for generations want to preserve their homes and wealth.
But with high property values and static inheritance tax thresholds, more and more estates in Richmond are falling into the 40% inheritance tax trap.
At Belgravia Capital Wealth Management, we help families in Richmond prepare for the future, not just by minimising tax, but by ensuring wealth is passed on with confidence and control.
In this guide, we break down the real inheritance tax risks for Richmond residents in 2025 and show you how to plan ahead before HMRC claims a large portion of your estate.
Why Inheritance Tax Hits Richmond So Hard
Richmond is one of London’s most desirable residential areas. From Richmond Hill to East Twickenham, detached homes and period townhouses regularly sell for upwards of £2 million, with many worth far more. But the tax system hasn’t kept pace.
Inheritance tax thresholds have been frozen since 2017. Each individual is allowed a nil-rate band of £325,000.
If you pass your home to children or grandchildren, you may also qualify for a residence nil-rate band of £175,000. Couples can combine their allowances for up to £1 million in tax-free inheritance - but that figure hasn’t risen despite house price inflation.
And if your estate exceeds £2 million, the residence nil-rate band starts to taper. For every £2 over the £2 million threshold, you lose £1 of this additional allowance.
By the time the estate reaches £2.35 million, you lose it altogether. With most detached homes in Richmond valued at £2.5 million or more, many families find themselves unexpectedly hit with huge tax bills, even if their estate consists almost entirely of a single home.
How Inheritance Tax Works for Richmond Estates
If your estate is worth more than your combined tax-free allowances, the excess is taxed at 40%.
That can lead to staggering tax bills, often in the hundreds of thousands, or even millions, depending on property value and other assets like pensions, savings, or art collections.
For example, a family owning a detached house in Petersham worth £3 million, along with investments and personal belongings worth another £800,000, could face an inheritance tax bill approaching £1.2 million, especially if their residence nil-rate band is tapered away due to the total estate value.
What makes this especially painful is that many families in Richmond are “asset rich but cash poor.”
Their wealth is tied up in a property that may have been purchased decades ago, often by parents or grandparents, with no intention of being sold.
But when inheritance tax becomes due, that’s often exactly what happens: the property must be sold to pay the tax.
The Planning Opportunities That Richmond Families Shouldn’t Ignore
The good news is that inheritance tax can be planned for, and in many cases, significantly reduced or even eliminated.
But the key is starting early. Here are the strategies we most often recommend for Richmond families.
First, make strategic use of lifetime gifts. You can give away £3,000 per year tax-free, and you can carry forward one unused year.
You can also make small gifts of £250 to as many people as you like, and larger wedding gifts within HMRC limits.
Most importantly, if you make a larger gift, whether that’s money, property, or shares, and you survive for seven years, the gift falls out of your estate for IHT purposes entirely.
This is often the easiest way for families with substantial assets to reduce their estate below the £2 million taper threshold.
Once below that line, you regain the full residence nil-rate band, which could save £70,000 in tax on its own.
Second, use trusts to retain control while moving assets out of your estate. A trust allows you to shift wealth to future generations while still specifying how and when that wealth is accessed.
This can be vital for families with children under 18, adult children who may need protection from poor financial decisions, or where the estate includes sentimental or complex assets like property, land, or company shares.
The right trust structure - whether it’s a discretionary trust, bare trust, or interest-in-possession trust - depends on your goals and family setup.
Our team works closely with solicitors to ensure your trust fits both the tax rules and your intentions.
Third, consider life insurance to cover the tax bill. A whole-of-life insurance policy, written in trust, can be used to pay the inheritance tax due on death.
Because the policy is held in trust, the payout isn’t included in your estate and can be accessed quickly to pay HMRC, avoiding delays or forced property sales.
This is especially useful for property-rich estates like those in Richmond. If you want to keep your home in the family, but lack liquid assets to settle the tax, insurance gives your heirs breathing room.
Fourth, maximise the tax efficiency of your pension. Many Richmond professionals have large defined contribution pension pots.
These can be passed on free of inheritance tax if structured properly. If you die before the age of 75, your pension can usually be inherited tax-free. After age 75, it’s taxed as income for the beneficiary, but still outside the estate for IHT purposes.
We often advise clients to preserve their pensions and pass them on, while drawing income from other taxable assets first.
Fifth, consider Business Property Relief if you own a company or hold certain types of investments.
Shares in qualifying AIM-listed companies or interests in private businesses may be exempt from inheritance tax after just two years of ownership.
But new changes coming in April 2026 will cap this relief at £1 million per person so action is needed now to benefit from the full allowance.
IHT Mistakes to Avoid When Planning in Richmond
The most common error we see is underestimating the value of the estate, especially the home.
Many people think they’re “comfortable, not wealthy,” because their income is modest. But when the house is worth £3 million and the estate exceeds £4 million, the tax consequences become serious.
Another mistake is relying on an outdated will. If your will was written before 2017, it may not take the residence nil-rate band into account, or may use trust language that unintentionally limits your tax allowances.
Always have your will reviewed in light of current legislation and your latest family situation.
We also see families forget to write life insurance into trust, which means the payout goes into the taxable estate, increasing, rather than reducing, the tax burden.
And finally, many people delay planning, assuming they’ll “get around to it later.” But the earlier you begin - especially when it comes to gifting - the more options you have and the more tax you can save.
Why Localised Inheritance Tax Planning Matters
Generic tax advice won’t cut it when you live in a borough like Richmond. The homes are more valuable, the family wealth is often more complex, and the risks are greater.
We work specifically with families in southwest London who want to:
Keep their homes in the family
Reduce or eliminate inheritance tax
Ensure assets are passed down smoothly
Structure their estate to avoid probate delays and disputes
Preserve legacies for children and grandchildren
Whether you own a riverfront mansion in St Margarets or a period villa in Richmond Hill, our team understands how to navigate the estate planning challenges that come with high-value homes and multi-generational legacies.
Next Steps for Richmond Families Looking to Avoid Inheritance Tax
Start by having your estate professionally valued - including your property, savings, investments, pensions, and life insurance.
Then speak to an adviser who can show you your potential IHT exposure and help you put a plan in place.
With the right advice and early action, you can keep control of your estate, preserve your family’s financial future, and ensure your wealth is used the way you intend, not handed over to HMRC.
Speak to Us Today
At Belgravia Capital Wealth Management, we specialise in inheritance tax planning for high-value families in Richmond, London, and the surrounding boroughs.
If you want a strategy tailored to your home, your family, and your legacy, contact us today for a confidential consultation.
020 3916 5954
