The short version: The Inheritance Tax allowance (or nil rate band) is how much you can leave behind tax free. Estates below this threshold don’t pay IHT.
How much is it?
The standard nil rate band is set by the government and reviewed periodically. There’s an additional residence nil rate band if you’re leaving your home to direct descendants like children or grandchildren. Check gov.uk for current figures.
Can allowances be combined?
Yes. If you’re married or in a civil partnership, any unused allowance from the first spouse to die can be transferred to the survivor. This can effectively double the threshold.
Do you still need to report to HMRC?
Usually yes, even if the estate is below the threshold and no tax is due. There are some exceptions for very small or simple estates, but it’s safer to check.
Gifts between spouses
Anything left to a spouse or civil partner is completely exempt from IHT, regardless of value. The allowance only matters when assets pass to other people.
Want to understand how IHT might affect your estate? Talk to us about planning ahead.
