The IHT computation that becomes an estate-planning referral

You are reviewing a client's affairs. Perhaps you are finalising a self-assessment return, valuing a shareholding, or updating a lifetime gifts schedule for a family trust. Somewhere in that work a figure emerges: the estate is comfortably over the nil-rate band, the residence nil-rate band is tapering away because the estate exceeds the £2 million threshold, and the projected inheritance tax charge is substantial.

That figure is a trigger. You have quantified an exposure that the client almost certainly has not confronted in concrete terms. As a tax adviser you are perfectly placed to compute it, explain the mechanics, and show the client the direction of travel. What you are not there to do is arrange the life policy, restructure the pension death benefits, advise on a whole-of-life plan written in trust, or draft the estate-planning documents. That is regulated implementation, and it sits with others.

The instinct at this point is to make a warm, unpaid introduction to whoever you happen to know. That instinct leaves value on the table and, more importantly, leaves the client's next step to chance.

Financial planners and estate specialists rely on clients volunteering that they have a problem. Tax advisers do not wait to be told. You are working from the actual numbers: the balance sheet, the gifting history, the business and agricultural property positions, the interaction between the nil-rate band and the residence nil-rate band, and the seven-year clock on lifetime transfers.

This means you routinely identify inheritance tax exposure at a stage when it is still highly addressable, often years before the client would otherwise seek advice. That early sight is genuinely valuable to the firm that ultimately implements the plan, because early planning gives more options and more time for gifts to fall outside the estate.

The referral network model recognises that value. As the introducer, you quantify the exposure and hand the implementation to a vetted, regulated advice firm or a vetted will and estate specialist. You are not advising on the solution; you are directing the client to someone who can, and you are compensated for the introduction rather than doing it for nothing.

The distinction that protects you is simple to state and must be held firmly. You introduce; you do not advise on the regulated solution. Computing the inheritance tax liability, explaining how the reliefs work, and telling the client that planning could reduce the charge are all squarely within your remit as a tax adviser. Recommending a specific product, structure, or provider to reduce that charge is not, unless you are separately authorised for it.

In practice this means your conversation ends with the shape of the problem and the name of a route to a solution, not with the solution itself. You might say that the exposure is real, that it is the kind of thing specialist advice firms address routinely, and that you can introduce the client to a vetted, regulated firm who will assess the options properly. You stop there.

That discipline is not a limitation on your value. It is the thing that makes the referral defensible, keeps you inside your professional competence, and keeps the client's regulated advice with a regulated adviser.

An ad hoc introduction is a name passed at the end of a meeting and then forgotten. A structured referral is documented, disclosed, and tracked. The client is told that you may receive a share of the fee for the introduction, that this does not change the advice they receive, and that they are free to use anyone they wish. The introduction itself goes to a firm that has been vetted and is properly regulated for the work.

Through a referral network, the mechanics are handled for you. The disclosure wording, the record of consent, and the fee-share arrangement are standardised rather than improvised firm by firm. Members typically retain a meaningful share of the resulting fee, in the region of 60 to 70 per cent, for identifying the client and making the introduction.

• You quantify the exposure from work you were already doing.
• You disclose the arrangement and obtain the client's agreement.
• The introduction goes to a vetted, regulated firm.
• You are paid a share when the work proceeds.

Inheritance tax exposure is not a one-off event in your practice; it recurs across your client base every year. Ageing clients, appreciating property, accumulated pensions and investment portfolios, and the frozen nil-rate band all push more estates over the threshold. Each of those is a computation you are likely to perform anyway.

If every one of those triggers currently ends in an unpaid introduction or, worse, no introduction at all, you are giving away a stream of value that a structured approach would capture. Treating the inheritance tax computation as the front end of a referral process, rather than the end of your involvement, converts a compliance-driven task into a repeatable source of introductions and income.

The work you do to find the number does not change. What changes is what happens next: instead of a favour, the client gets a warm route to properly regulated help, and you get a documented, compliant share of the value you created by spotting the exposure first.