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Current UK inheritance tax threshold
The current inheritance tax threshold in the UK is usually called the “nil-rate band”. This is the amount of an estate that can be passed on before inheritance tax is charged. At present, the standard nil-rate band is £325,000 per person.
If the value of an estate is below this threshold, no inheritance tax is normally due. If it is above the threshold, tax may be charged on the amount above it. The standard rate of inheritance tax is 40%.
Residence nil-rate band
There is also an extra allowance known as the residence nil-rate band. This may apply when a main home is left to children or grandchildren. For the 2024/25 tax year, this allowance is up to £175,000 per person.
When combined with the standard nil-rate band, some people can pass on up to £500,000 tax-free. For married couples and civil partners, unused allowances can usually be transferred to the surviving partner. This can mean a combined threshold of up to £1 million in some cases.
Who pays inheritance tax?
Inheritance tax is paid from the estate, not usually by the people who inherit. The executor or administrator deals with the tax before the estate is distributed. If the estate is liable, the tax is normally due within six months of the person’s death.
Not every estate pays inheritance tax. Many estates fall below the threshold, and some transfers between spouses, civil partners, or charities are exempt. Gifts made during a person’s lifetime may also affect how much tax is due.
Important points to remember
The threshold has been frozen for several years, which means more estates can be pulled into inheritance tax as property values rise. This is why people may need to review their estate planning even if they do not think of themselves as wealthy. It is also worth remembering that thresholds can change in future Budgets.
If you think inheritance tax may apply to your estate, it can be useful to take financial advice. Rules around gifts, trusts, and property can be complicated. A solicitor or financial adviser can help you understand what the current rules mean for your situation.
Frequently Asked Questions
The standard inheritance tax threshold UK current amount is usually the nil-rate band of £325,000 per person. In some cases, an additional residence nil-rate band may also apply if a home is passed to direct descendants.
For an individual, assets up to the inheritance tax threshold UK current amount are typically taxed at 0%. Only the value above that threshold may be charged inheritance tax, usually at 40%.
Married couples and civil partners can usually transfer unused inheritance tax threshold UK current amount allowances to each other, which can increase the total tax-free amount available on the second death.
The inheritance tax threshold UK current amount for an estate is commonly the nil-rate band of £325,000, with possible extra reliefs depending on the estate and who inherits the property.
The inheritance tax threshold UK current amount is generally fixed at £325,000 as the main nil-rate band, though government rules can change in future and some additional allowances may apply in specific situations.
The inheritance tax threshold UK current amount often refers to the main nil-rate band only. The residence nil-rate band is separate and may be added if a qualifying home is left to direct descendants.
Any UK estate can potentially use the inheritance tax threshold UK current amount, but whether tax is due depends on the total value of the estate, any gifts, debts, and available reliefs.
The inheritance tax threshold UK current amount can reduce or remove tax on part of a home inheritance if the estate qualifies for the residence nil-rate band and the property passes to direct descendants.
If an estate exceeds the inheritance tax threshold UK current amount, the amount above the threshold may be taxed, usually at 40%, after any available exemptions and reliefs are applied.
Yes, gifts made during life can reduce the value of an estate and may lower the inheritance tax due, but some gifts can still be counted for inheritance tax purposes depending on when they were made.
Unused allowances can increase the effective inheritance tax threshold UK current amount for a surviving spouse or civil partner, especially where the unused nil-rate band is transferred.
For a single homeowner, the inheritance tax threshold UK current amount is usually £325,000, plus a possible residence nil-rate band if the home is left to direct descendants and conditions are met.
Trusts can affect how the inheritance tax threshold UK current amount is used, because some transfers into or out of trusts are treated differently and may trigger separate inheritance tax rules.
The inheritance tax threshold UK current amount does not usually change every year, but it can be altered by government policy, and it has remained at £325,000 for long periods.
Debts and liabilities are deducted from the estate before checking the inheritance tax threshold UK current amount, which can reduce the taxable value of the estate.
Charitable gifts do not increase the inheritance tax threshold UK current amount itself, but they can reduce the tax rate on the rest of the estate if enough is left to charity.
To work out the inheritance tax threshold UK current amount, you usually need details of assets, debts, gifts, property ownership, and any will or trust documents.
The inheritance tax threshold UK current amount is generally the same across the UK for inheritance tax purposes, although Scottish succession law can affect how an estate is passed on.
The usual inheritance tax rate above the inheritance tax threshold UK current amount is 40%, though it may be reduced in some cases, such as when at least 10% of the estate is left to charity.
You can check the inheritance tax threshold UK current amount for your situation by reviewing current HMRC guidance or speaking to a solicitor or tax adviser, especially if the estate includes property, gifts, or trusts.
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