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For many Muslim families in the UK, rising property values and long-term savings mean that their total wealth has increased significantly over their lifetime. While providing for your family is a positive achievement, it can raise an important practical question: how will inheritance tax (IHT) affect the estate you leave behind?
Inheritance tax can be a complex area of law. Understanding the basic rules can help you approach your estate planning with greater clarity and ensure your Islamic Will is structured appropriately for your circumstances.
This article provides general educational information, not personal tax or legal advice. Tax rules, thresholds, and allowances are subject to change. Always seek professional advice tailored to your individual estate.
The basic inheritance tax threshold
In the UK, inheritance tax is normally charged at 40% on the portion of your estate that falls above a tax-free threshold (known as the nil-rate band).
Currently, the standard tax-free threshold is £325,000. If the total value of your estate is below this amount, there is normally no inheritance tax to pay.
However, many families—particularly those who own a home in London or the South East—find that their assets exceed this basic threshold. In certain circumstances, additional allowances may apply. For example, if you leave your main home to your children or grandchildren, your tax-free threshold can increase. Similarly, married couples and civil partners can often combine their unused allowances, potentially allowing them to pass on a larger combined estate free of inheritance tax.
Because these allowances depend on exactly who inherits your assets, a carefully drafted Will is essential to ensure your estate is distributed as you intend.
What is included in your estate?
When calculating the value of your estate for inheritance tax purposes, the calculation generally includes:
- Property and land (including your share of any jointly owned property)
- Money in bank accounts and savings
- Investments, stocks, and shares
- Businesses and business assets
- Personal possessions, such as jewellery or vehicles
Importantly, the calculation can also include certain assets that you gave away before you died if you continued to benefit from them. For example, if you give your house to your children but continue to live in it rent-free, the property may still be treated as part of your estate under the “gift with reservation of benefit” rules.
The 7-year rule for gifts
Many parents wish to support their children financially during their lifetime. Giving gifts can reduce the overall value of the estate you leave behind, but there are strict rules about how these gifts are treated for tax purposes.
Under the “7-year rule”, if you give a gift and survive for seven years after giving it, that gift is normally exempt from inheritance tax (unless it is part of a trust). If you pass away within seven years of making the gift, it may be counted towards the value of your estate, and inheritance tax may be due on it.
There are some exceptions. You have an “annual exemption” that allows you to give away a certain amount each tax year (currently £3,000) without it being added to your estate. You can also make smaller gifts or regular payments from your income, provided they meet specific conditions.
Why a professional Islamic Will matters
When considering how to pass on your wealth, the priority for a Muslim is often to ensure the distribution aligns with Islamic inheritance principles.
Some families mistakenly assume that transferring assets directly to their children during their lifetime or relying on informal arrangements is the simplest way to manage their estate. However, doing so without professional advice can trigger unexpected capital gains tax, create disputes if a child divorces or faces financial difficulties, or result in an inheritance tax bill if the correct rules are not followed.
A professionally prepared Islamic Will ensures your wishes are legally binding in England and Wales. Where an estate is complex or high-value, it also allows you to explore appropriate structures—such as a trust-based Islamic Will—alongside specialist tax advice.
For Muslim families in Maidstone and across Kent, Qadar Wills can discuss the available options and whether a home visit is available for your circumstances. Contact the team to begin the conversation.
Qadar Wills supports Muslim families in Maidstone, across Kent and throughout England and Wales. Contact Qadar Wills to discuss a Kent home visit.
Last reviewed: 11 August 2026 by Russell Ali.