How much is inheritance tax in the UK?
Inheritance tax is charged at 40% on the part of an estate that exceeds the available tax-free allowances. The standard nil-rate band is £325,000, with an extra residence nil-rate band of up to £175,000 when a home passes to direct descendants. Leave 10%+ of the net estate to charity and the rate drops to 36%. Around 96% of estates pay no inheritance tax at all.
Detailed explanation
The headline rate sounds high, but it only applies above the allowances — and only a small minority of estates are affected.
- Nil-rate band: £325,000 tax-free (frozen to April 2031).
- Residence nil-rate band: up to £175,000 more when a home passes to children or grandchildren.
- Couples: unused allowances pass to a surviving spouse or civil partner, so a couple can often pass on up to £1m tax-free.
- Rate: 40% above the allowances; 36% if at least 10% of the net estate goes to charity.
An estate of £500,000 left by a single person with a home to their children uses the £325,000 nil-rate band plus £175,000 residence nil-rate band = £500,000 tax-free, so there is no inheritance tax. An estate of £600,000 in the same situation pays 40% on the £100,000 excess = £40,000.
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Sources
- GOV.UK — How Inheritance Tax works: thresholds, rules and allowances
- GOV.UK — Inheritance Tax: residence nil rate band
- HMRC — Inheritance Tax statistics 2024/25
- Reviewed by
- ClearLegacy editorial team
- Last reviewed
- June 2026
- Next review
- December 2026
- Jurisdiction
- England & Wales
Frequently asked questions
How much is inheritance tax in the UK?
Inheritance tax is 40% on the value of an estate above the available allowances. The nil-rate band is £325,000, plus up to £175,000 residence nil-rate band when a home passes to direct descendants. The rate falls to 36% if 10% or more of the net estate is left to charity.
Who pays inheritance tax in the UK?
Only estates worth more than the available allowances pay — around 4% of estates. The tax is paid from the estate by the executors or administrators, not usually by individual beneficiaries.
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