What is the UK inheritance tax rate for 2024/25?

The UK inheritance tax rate is 40% on estates above the nil-rate band of £325,000. The rate reduces to 36% if 10% or more of the estate is left to charity.

What is the residence nil-rate band?

The residence nil-rate band is an additional £175,000 allowance available when you leave your main residence to direct descendants (children or grandchildren).

Who pays inheritance tax?

Inheritance tax is typically paid by the executors of the estate from the estate's assets before distribution to beneficiaries. Payment is usually due within 6 months of death.

Understanding the Residence Nil Rate Band (RNRB)

The Residence Nil Rate Band (RNRB) is an additional inheritance tax allowance of £175,000 available when you leave your main residence to direct descendants. Combined with the standard nil rate band, a single person can pass £500,000 free of IHT, while couples can protect up to £1,000,000.

Key RNRB Facts for 2024/25

Current RNRB: £175,000 per person
Transferable: unused RNRB passes to surviving spouse or civil partner
Combined (couple): up to £350,000 RNRB + £650,000 NRB = £1,000,000 total
Eligibility: main residence must pass to children, grandchildren, or other direct descendants
Taper: RNRB reduces by £1 for every £2 above the £2,000,000 estate threshold

Who Qualifies for RNRB?

The deceased must have owned a qualifying residential property at some point
The property (or proceeds from its sale) must be left to direct descendants
Direct descendants include children, stepchildren, adopted children, and grandchildren
Estates over £2,000,000 have a reduced RNRB (tapered away at £2,350,000)