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Inheritance Tax
The inheritance tax (IHT) nil rate band (NRB) is set at £325,000 as of April 2025. And at the Autumn Budget in October 2024 Chancellor Rachel Reeves announced Inheritance Tax thresholds will stay at their current levels for tax years 2028 to 2029 and 2029 to 2030. As a result, the following all stay the same in this period, barring any further tinkering by the Treasury from April 2025 onwards:
- nil-rate band at £325,000
- residence nil-rate band at £175,000
- residence nil-rate band taper, starting at £2 million
Inheritance Tax rates
There is a standard rate of 40% - this applies to the part of your estate about the relevant threshold.
The standard Inheritance Tax rate is 40%. It’s only charged on the part of your estate that’s above the threshold.
This rate drops to 36% on some of the assets but only if you pass on 10% or more of the ‘net value’ to charity in your will.
Residence Nil Rate Band
An additional nil-rate band (the ‘residence nil rate band’ (RNRB)) applies where an individual dies after 5 April 2017 and their estate is above the NRB. The RNRB applies when the whole or part share in the deceased’s home is passed on death to direct descendants. The maximum value of the RNRB is the lower of: the value of the home passed on, or the amount in the table below:
| Year of death | Value of RNRB |
| 2017/18 | £100,000 |
| 2018/19 | £125,000 |
| 2019/20 | £150,000 |
| 2020/21 | £175,000 |
| 2021/22 | £175,000 |
| 2022/23 | £175,000 |
| 2023/24 | £175,000 |
| 2024/25 | £175,000 |
| 2025/26 | £175,000 |
The value of RNRB is tapered away at £1 for every £2 by which the value of the total estate exceeds £2 million.
