As of the current tax year, the inheritance tax (IHT) rates in the UK are:
- Nil-rate band: The first £325,000 of an individual’s estate is tax-free.
- Residence nil-rate band: An additional £175,000 may be available if the deceased leaves their home to direct descendants, such as children or grandchildren, bringing the potential tax-free threshold to £500,000 for individuals and £1 million for married couples or civil partners. The Residence Nil Rate Band is reduced if the total estate is over £2,000,000
- Above the nil-rate band: Any amount above nil rate band and available residence nil rate band is taxed at 40%.