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).

What is Inheritance Tax in the UK?

Inheritance tax (IHT) is a tax charged on the estate (property, money, and possessions) of someone who has died. In the UK, the standard IHT rate is 40% on the portion of the estate above the nil rate band threshold of £325,000 for 2024/25.

Key IHT Facts for 2024/25

Nil Rate Band: £325,000 — estates below this pay no IHT
Residence Nil Rate Band: £175,000 — additional allowance when leaving home to direct descendants
Standard rate: 40% on the taxable estate
Charitable rate: 36% when 10% or more is left to charity
Spouse exemption: transfers between spouses and civil partners are fully exempt

Who Pays Inheritance Tax?

The estate's executors pay IHT from the estate's assets before distribution to beneficiaries. IHT must be paid within 6 months of the date of death. Property IHT can be paid in instalments over 10 years.

Key Exemptions

Transfers between UK-domiciled spouses and civil partners
Gifts to registered charities
Annual gift allowance: £3,000 per year
Gifts surviving more than 7 years (potentially exempt transfers)
Business Property Relief and Agricultural Property Relief