Donald Trump could slash your inheritance tax bill - if you act fast

Share price volatility has wiped trillions off global stock and pension values, and thrown many people's retirement plans into disarray.

But there may be one bright side when it comes to tax planning.

Amidst the confusion, tax experts have spotted a rare window of opportunity for savvy investors and families looking to reduce their future inheritance tax (IHT) bills.

While most people view market downturns with dismay, falling share prices can actually be a powerful tool in estate planning.

With Chancellor Rachel Reeves planning to charge IHT on pensions from March 2027, and driving up IHT bills for small business owners and farmers, those affected need to seize on every opportunity they can.

Anna Haworth, tax director at accountancy firm RSM, said today's uncertainty presents a prime opportunity to gift assets, but particularly shares, at a lower value, reducing the potential IHT liability.

If shares are gifted today, their value for IHT purposes will be calculated at today's depressed valuations, she said.

"Any subsequent growth is fully outside the scope of IHT for the person making the gift."

IHT is calculated based on the value of the asset at the time of the gift, not its future value.

Once markets recover, shares handed over during a market dip could appreciate significantly outside of the donor's estate, without attracting extra IHT.

This strategy is especially attractive for individuals holding shares in sectors hit hard by current volatility, such as technology, manufacturing, or family investment companies with portfolios linked to global markets.

Haworth said accurate documentation is essential. "Whilst gifting assets now could potentially reduce the size of an individual's taxable estate, it is essential that the valuations of such assets are documented in the event of a later query from HMRC."

For families holding unlisted companies, where valuations aren't immediately obvious, professional advice is critical, she added.

But this is not the only avenue open to those navigate rising taxes and volatile stock markets.

Judith Millar, partner in the private wealth team at law firm Broadfield, points to a lesser-known relief that could benefit those administering estates during market slumps.

Millar said: "IHT is calculated on values at the point of death. However, when publicly traded stocks and shares are later sold at a lower value, executors can claim what is called 'loss on sale relief'."

This allows executors to claim back overpaid IHT if the shares are sold within 12 months of death for a lower amount than their value at the time of death.

To qualify, the sales must produce an overall loss and all qualifying shares must be included in the claim.

"Claims can be made up to four years after the end of the 12-month period. It's a valuable tool for those who inherit during a market peak, only to see values fall shortly after," Millar said.

To use this relief, executors must submit an official form and provide documentary proof of sale and valuations.

In volatile markets, this could mean reclaiming thousands in IHT, funds that can then remain within the family or estate.

With Reeves tightening the tax screws, and markets still facing uncertainty, those with wealth to pass on should consider acting now.

It's an ill wind that blows no good. The current market dip in the market may have a silver lining. If you act fast. Tax planning is complicated though, so consider independent financial advice.