How it works
- Value the estate. Property, savings, investments and possessions, less debts.
- Apply the nil rate band. The first £325,000 is taxed at 0%.
- Add the residence nil rate band. Up to £175,000 more when a home passes to children or grandchildren.
- Apply 40%. The rest is taxed at 40%, or 36% if you leave at least 10% of the estate to charity.
The main reliefs
Transfers between spouses and civil partners are exempt, and unused nil rate bands pass to the survivor, so a couple can often pass on up to £1 million between them. Gifts made more than 7 years before death usually fall out of the estate, and Business and Agricultural Relief can reduce the value of qualifying assets.
Worried about the bill on your estate?
Inheritance tax is one of the most reducible taxes with planning. TaxTune reviews your estate, uses every band and relief, and helps structure gifts and assets to protect more for your family.
Let us help protect your estate
We work out your likely inheritance tax, use the bands and reliefs available, and plan gifts and assets to reduce what your family pays. Fixed fee.
Frequently asked questions
What is the inheritance tax threshold?
The nil rate band is £325,000, taxed at 0%. A residence nil rate band of up to £175,000 can be added when you leave your home to direct descendants.
What is the inheritance tax rate?
40% on the value of the estate above the available nil rate bands, reduced to 36% if you leave at least 10% of the estate to charity.
Is money left to my spouse taxed?
No. Transfers between spouses and civil partners are normally exempt, and any unused nil rate band passes to the survivor, potentially sheltering up to £1 million for a couple.
How can I reduce inheritance tax?
Use both nil rate bands, make gifts more than 7 years before death, leave to charity, and use reliefs such as Business and Agricultural Relief. Planning early gives the most options.
When is inheritance tax paid?
It is usually due within 6 months of the end of the month of death, and often has to be paid before probate is granted, though tax on property can be paid in instalments.