Inheritance Tax Planning in St John’s Wood: Protecting Family Wealth in One of London’s Premier Residential Areas

With its grand white stucco villas, leafy avenues, and world-famous neighbours like Regent’s Park and Lord’s Cricket Ground, St John’s Wood remains one of the most prestigious addresses in London.

The area’s elegant homes and cosmopolitan character have long attracted the city’s high-net-worth families, professionals, and international residents.

But the very success of St John’s Wood families also brings risk; and increasingly, that risk comes in the form of inheritance tax (IHT).

With property prices routinely exceeding £5 million and many households holding significant pensions, investments, and international assets, local families now face some of the highest inheritance tax exposures in the country.

At Belgravia Capital Wealth Management, we help St John’s Wood families take control of inheritance tax through proactive, personalised planning.

In this guide, we explain why IHT is now such a pressing issue in NW8 and how to protect your family wealth for future generations.

For IHT advice, contact us here.

Why Inheritance Tax Is a Major Issue in St John’s Wood

Inheritance tax thresholds have remained frozen since 2017:

• Each individual has a £325,000 nil-rate band.

• An additional £175,000 residence nil-rate band applies if you leave your main home to children or grandchildren.

• Married couples and civil partners can combine these allowances, giving up to £1 million tax-free inheritance.

However, if your estate exceeds £2 million, the residence nil-rate band begins to taper away, disappearing completely at £2.35 million.

In St John’s Wood, this taper affects a vast proportion of families:

• Detached homes on Avenue Road, Hamilton Terrace, Elm Tree Road, and St John’s Wood Park often sell for £5 million to £20 million+.

• Period houses on St John’s Wood Terrace and streets around Circus Road and St John’s Wood High Street are frequently valued at £3 million to £6 million.

• Even smaller homes and modern apartments exceed £2 million, meaning many local families lose valuable IHT allowances.

When combined with pensions, investments, international assets, and personal possessions, it is now rare for St John’s Wood estates to avoid inheritance tax entirely.

A Typical St John’s Wood Inheritance Tax Liability Example

Let’s take the example of a family owning a £7 million villa on Hamilton Terrace. They also hold:

• £1 million in pensions.

• £1 million in ISAs and investments.

• £500,000 in international bank accounts.

• £500,000 in art, jewellery, and personal possessions.

The total estate is now worth £10 million.

Because this exceeds £2.35 million, the couple loses the residence nil-rate band, leaving just the £650,000 nil-rate band available.

That leaves £9.35 million taxable at 40%, resulting in a potential inheritance tax bill of £3.74 million.

Without careful planning, the family could be forced to sell prized assets - or even their home - to pay this liability.

Why St John’s Wood Families Must Plan Proactively

Many NW8 families face complex financial dynamics:

• Asset-rich but often cash-constrained, with wealth tied up in property.

• Large international estates, exposing them to UK and overseas inheritance tax.

• Blended families and international heirs, making estate planning more sensitive.

• Strong desire to preserve family homes, art, and business interests, but no plan in place to fund inheritance tax bills.

Without proactive planning, your family risks losing wealth unnecessarily or seeing treasured assets sold in distress.

At Belgravia Capital Wealth Management, we specialise in working with complex, international St John’s Wood estates, helping families plan ahead with confidence.

Key Inheritance Tax Planning Strategies for St John’s Wood Families

Lifetime Gifting

Gifting is one of the simplest and most powerful ways to reduce IHT exposure.

• You can give away £3,000 per year tax-free, and carry forward one unused year.

• Small gifts of up to £250 per person per year are also exempt.

• Larger gifts are treated as potentially exempt transfers, provided you survive seven years after the gift, they fall outside your estate.

In St John’s Wood, we often help families gift:

• Surplus income (which can be gifted tax-free if structured correctly).

• Cash and shares.

• Art, antiques, and valuables.

• Interests in UK and international property.

Using Trusts to Protect Wealth from IHT

Trusts allow you to move assets out of your estate while keeping control over how they are used.

Common structures include:

• Discretionary trusts - for flexibility across generations.

• Bare trusts - for direct gifts to adult children.

• Interest-in-possession trusts - providing income for a surviving spouse while protecting capital for children.

Trusts are especially valuable in St John’s Wood because:

• Many families want to preserve wealth for future generations, not just direct heirs.

• Families often own complex assets, such as art or international property, which are best protected in trust structures.

• Trusts can help estates hovering near the £2 million taper threshold to preserve valuable reliefs.

Whole-of-Life Insurance to Provide Liquidity

A whole-of-life insurance policy, written in trust, provides a tax-free payout to cover inheritance tax.

This ensures that your heirs are not forced to sell property or assets to pay HMRC.

In NW8, where estates are often asset-rich but illiquid, this is an essential tool, especially for families wanting to preserve landmark homes or international property.

Pension Planning

Pensions are a major inheritance tax planning opportunity:

• Defined contribution pensions sit outside your estate for IHT purposes.

• If you die before age 75, your pension can be inherited tax-free.

• If you die after 75, beneficiaries pay income tax on withdrawals, but no IHT.

We frequently help St John’s Wood families:

• Optimise death benefit nominations.

• Structure pensions for international beneficiaries.

• Combine pensions strategically with other wealth to minimise inheritance tax.

Business Property Relief (BPR)

If you own a qualifying business or AIM-listed shares, you may be eligible for Business Property Relief, reducing IHT on those assets by up to 100%.

From April 2026, BPR will be capped at £1 million per person, so now is the time to plan.

Many NW8 families hold:

• UK private businesses.

• Interests in international companies.

• AIM-listed share portfolios.

We advise on structuring these assets effectively within your estate plan.

Common Inheritance Tax Mistakes to Avoid

Many St John’s Wood families make similar mistakes:

Underestimating estate value

Families often overlook:

• International bank accounts and property.

• Art, jewellery, and collectibles.

• Life insurance not held in trust.

Outdated wills

Older wills may not reflect modern allowances, or the needs of international families.

Ignoring the £2 million taper

With careful planning, estates close to £2 million can retain valuable reliefs.

Holding life insurance outside of trust

This increases your taxable estate unnecessarily.

Failing to structure pensions optimally

Pensions are often an underused IHT planning tool.

Why Local Expertise Matters

St John’s Wood presents unique inheritance tax challenges:

• Exceptionally high property values, with most estates well above the IHT threshold.

• Complex international assets and family structures.

• Multi-generational wealth and sensitive family dynamics.

• Desire to preserve iconic NW8 properties for future generations.

At Belgravia Capital Wealth Management, we provide bespoke inheritance tax planning specifically for St John’s Wood families.

We understand:

• The local property market.

• The needs of international families.

• How to navigate complex cross-border wealth structures.

• How to integrate UK inheritance tax planning with international estate planning.

Next Steps for St John’s Wood Families when Estate Planning

If you own a high-value home in St John’s Wood, particularly in:

• Hamilton Terrace.

• Avenue Road.

• Elm Tree Road.

• Circus Road.

• St John’s Wood Park.

• NW8 conservation areas.

… your estate is almost certainly exposed to inheritance tax.

Now is the time to act:

• Have your full estate professionally valued.

• Review and update your will.

• Consider lifetime gifts and trust structures.

• Explore insurance options to provide liquidity.

• Optimise pensions for maximum tax efficiency.

• Plan around upcoming BPR changes.

Conclusion: Protect Your St John’s Wood Legacy from IHT and HMRC

Inheritance tax is no longer a niche concern in St John’s Wood - it is a mainstream risk for most families.

But with smart, proactive planning, you can ensure that your wealth passes to the people you care about, not to HMRC.

At Belgravia Capital Wealth Management, we help St John’s Wood families take control of inheritance tax with clarity and confidence.

Contact us today to begin protecting your family legacy.

www.belgravia-capital.co.uk

contact@belgravia-capital.co.uk

020 3916 5954