In the United Kingdom, inheritance tax (IHT) is a topic of considerable importance for individuals planning the distribution of their assets. Understanding how much you can inherit before paying tax is crucial for effective financial planning. This blog provides a clear overview of the current thresholds and exemptions, aiming to demystify the subject for beneficiaries and estate planners alike.

The Basics of Inheritance Tax

Inheritance tax in the UK is levied on the estate of a deceased person, including all property, money, and possessions, after deducting debts and funeral expenses. The standard threshold—known as the Nil-Rate Band (NRB)—is set at £325,000 for the 2023/2024 tax year (in fact it has been set at this level since 6 April 2009 and it is currently planned that it will remain at this level until 4 April 2028). Assets valued below this amount are not subject to IHT. For estates exceeding this threshold, IHT is charged at 40% on the amount over £325,000.

Transferring the Nil-Rate Band

A significant aspect of IHT planning is the ability to transfer any unused NRB between married couples and civil partners. This means that if one partner dies and does not use their entire NRB, the remaining portion can be transferred to the surviving partner, potentially doubling the NRB to £650,000.

Residence Nil-Rate Band: An Additional Allowance

The Residence Nil-Rate Band (RNRB) is an additional threshold, introduced to help individuals pass on their family home to direct descendants, such as children or grandchildren, with a reduced tax liability. As of the current tax year, the RNRB stands at £175,000 per person. Similar to the NRB, the RNRB is transferable between spouses and civil partners, which can increase the total available threshold.

However, the RNRB is subject to certain conditions and is only applicable when passing a main residence to direct descendants. Additionally, assets with a net value of more than £2 million will see the RNRB tapered away, reducing by £1 for every £2 above this threshold.

Exemptions and Gifts

UK inheritance tax law allows for several exemptions that can significantly reduce tax liability. Gifts between spouses or civil partners are exempt from IHT, as are gifts to charities and political parties. Moreover, gifts given more than seven years before the death of the giver are typically exempt from IHT, encouraging early planning.

Strategies for Mitigating IHT

Effective asset distribution planning involves utilising the available thresholds and exemptions to minimise IHT liability. This may include making strategic gifts, setting up trusts, or investing in assets eligible for Business Relief or Agricultural Relief. Given the complexity and nuances of inheritance tax law, seeking professional advice is strongly recommended to ensure that your estate planning is both efficient and compliant with current legislation.


Understanding the intricacies of UK inheritance tax is essential for anyone looking to manage their estate effectively. By taking advantage of the available allowances and engaging in proactive asset distribution planning, it’s possible to significantly mitigate the impact of IHT. As laws and thresholds may evolve, staying informed and consulting with estate planning professionals is key to safeguarding your legacy for future generations.

For personalised advice and assistance consider consulting a professional at The Will Centre. Our experts can guide you through the complexities of Inheritance Tax and help secure your family’s financial future.