Inheritance Tax Rates
| Inheritance Tax | 2024-25 | 2023-24 | |||
| Nil rate band for individuals* | £325,000 | £325,000 | |||
| Thereafter – lifetime gifts** | 20% | 20% | |||
| – lower rate on death*** | 36% | 36% | |||
| – on death | 40% | 40% | |||
| Residence nil rate band**** | £175,000 | £175,000 | |||
| * Unused nil rate band can be used by surviving spouse or civil partner. This band is currently frozen until April 2028. ** Increased to 40%, subject to tapering relief, on gifts made between 3 and 7 years pre death. Certain lifetime gifts are exempt. Special rules for business property. *** A lower rate applies where 10% or more of the net estate is left to charity. | |||||
| **** The inheritance tax main residence nil rate band (MRNRB) came into effect in April 2017. The MRNRB allows for a £175,000 per person transferable allowance for married couples and civil partners when their main residence is passed down to children after their death. The MRNRB is in addition to the £325,000 inheritance tax threshold. | |||||
| Years before death | 0-3 | 3-4 | 4-5 | 5-6 | 6-7 |
| % of death charge | 100% | 80% | 60% | 40% | 20% |
| Main exempt lifetime gifts | |||||
| Recurring annual gifts out of surplus income | unlimited | ||||
| Annual gifts out of capital (with one year carry forward if unused) | £3,000 | ||||
| Small gifts (per recipient) | £250 | ||||
| Parental gift on marriage | £5,000 | ||||
| Grandparent or party to marriage | £2,500 | ||||
| Other gifts on marriage (per donor) | £1,000 | ||||
| Business Property Relief | |||||
| Shares in unquoted companies (including USM/AIM stocks) | 100% | ||||
| Shares in quoted companies | |||||
| – shareholding up to 50% | none | ||||
| – shareholding over 50% | 50% | ||||
| Unincorporated business or interest in a business | 100% | ||||
| Land, buildings, plant and machinery used in the deceased’s business/company | 50% | ||||
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