Glossary · UK
What is Inheritance Tax (IHT)?
Tax on the estate of someone who has died, above the nil-rate band threshold.
Full Definition
IHT is charged at 40% on the value of an estate above the nil-rate band of £325,000 (frozen until 2030). An additional Residence Nil-Rate Band (RNRB) of £175,000 applies when you leave a main residence to direct descendants — a couple can pass up to £1m IHT-free using both allowances. The rate reduces to 36% if at least 10% of the net estate is left to charity. Transfers between spouses or civil partners are fully exempt. Gifts made more than 7 years before death are exempt; sliding-scale "taper relief" reduces tax on gifts made 3–7 years before death.
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Disclaimer: Definitions are for guidance only. For decisions about your tax, savings, property or pension situation, always consult a qualified professional or refer to gov.uk.