What is the nil-rate band?
The nil-rate band is the slice of an estate that is taxed at 0% for inheritance tax — currently £325,000 per person. Anything above the available bands is taxed at 40%. Any unused percentage of the nil-rate band transfers to a surviving spouse or civil partner, so couples can effectively double it. It is frozen until April 2031.
Detailed explanation
It's the foundation of inheritance-tax planning: the amount everyone can pass on tax-free.
- £325,000 per individual, taxed at 0%.
- Transferable nil-rate band: the unused share passes to a surviving spouse, so a couple commonly has £650,000 before the residence band is even counted.
- Certain lifetime gifts within seven years of death can use up part of the band first.
When Bill dies leaving everything to his wife, none of his £325,000 nil-rate band is used (spouse transfers are exempt). On her later death, her estate can claim 100% of his unused band on top of her own.
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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
What is the nil-rate band for inheritance tax?
It is the £325,000 of an estate that is free of inheritance tax. Value above the available bands is taxed at 40%. Unused nil-rate band transfers to a surviving spouse or civil partner.
Can you transfer the nil-rate band to a spouse?
Yes. When the first spouse or civil partner dies, the unused percentage of their nil-rate band transfers to the survivor, so couples can combine them — up to £650,000 from the standard band alone.
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