Inheritance Tax
| 2024/25 | 2023/24 | |
|---|---|---|
| Nil rate band (NRB)* | £325,000 | £325,000 |
| NRB Residential enhancement (RNRB)†* | 175,000 | 175,000 |
| Tax rate on death** | 40% | 40% |
| Tax rate on lifetime transfers to most trusts | 20% | 20% |
*Up to 100% of the proportion of a deceased spouse’s/civil partner’s unused NRB and RNRB band may be claimed to increment the current NRB and RNRB when the survivor dies.
†RNRB is available for transfers on death of a main residence to (broadly) direct descendents. It tapers away at the rate of £1 for every £2 of estate value above £2m.
**Rate reduced to 36% if at least 10% of the relevant estate is left to charity. Unlimited exemption for transfers between spouses/civil partners, except if UK domiciled transferor and foreign domiciled transferee, where maximum exemption £325,000.
100% Business Property Relief (BPR) for all shareholdings in qualifying unquoted trading companies, qualifying unincorporated trading businesses and certain farmland/buildings.
Reduced tax charge on gifts within 7 years before death
| Years before death | 0-3 | 3-4 | 4-5 | 5-6 | 6-7 |
| % of full death tax charge payable | 100 | 80 | 60 | 40 | 20 |
Annual exemptions for lifetime gifts include £3,000 per donor and £250 per recipient.