Inheritance Tax

Information on the inheritance tax system

Inheritance Tax, what you need to know

Inheritance Tax is a tax on the estate (the property, money and possessions) of someone who’s died.

Inheritance Tax to pay if either:

  • the value of your estate is below the £325,000 * threshold
  • you leave everything to your spouse or civil partner, a charity or a community amateur sports club
  • if the estate’s value is below the threshold you’ll still need to report it to HMRC

Give away your home to your children (including adopted, foster or stepchildren) or grandchildren, your threshold will increase to £450,000 *

If you’re married or in a civil partnership and your estate is worth less than your threshold, any unused threshold can be added to your partner’s threshold when you die. This means their threshold can be as much as £900,000 *

Inheritance Tax rates

The standard Inheritance Tax rate is 40%*. It’s only charged on the part of your estate that’s above the threshold.

Example *

Your estate is worth £500,000 and your tax-free threshold is £325,000. The Inheritance Tax charged will be 40% of £175,000 (£500,000 minus £325,000).

For more information visit the UK Government Website by clicking here

* Prices correct as of August 2018.