Inheritance Tax is a tax on the estate (the property, money and possessions) of someone who’s died.
There’s normally no Inheritance Tax to pay if:
- 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 you’re married or in a civil partnership and your estate is worth less than £325,000, you can transfer any unused threshold to your partner when you die. This means their threshold can be as much as £650,000.
Inheritance Tax rates
Inheritance Tax is charged on your estate at 40%.
If Inheritance Tax on gifts is due, it’s charged on a sliding scale known as taper relief.
Inheritance Tax reliefs, eg Business Relief, allow some assets to be passed on free of Inheritance Tax or with a reduced bill.
Contact the probate and Inheritance Tax helpline if your estate includes a farm or woodland.
Who pays the tax to HMRC
Your beneficiaries (the people who inherit your estate) don’t normally pay tax on things they inherit. There are some exceptions.
They may have other taxes to pay, eg if they get rental income from a house left to them in a will.
People you give gifts to might have to pay Inheritance Tax, but only if you give away more than £325,000 and die within 7 years.