Tax rates and allowances
The government has previously announced that the inheritance tax (IHT) threshold will remain frozen at £325,000 until 2027/2028. In addition, the residence nil-rate band will also be frozen at £175,000. When added to the IHT threshold of £325,000, it allows each individual to pass on £500,000 with no IHT payable - or £1m per couple. There is a tapered withdrawal of the additional nil-rate band for estates with a net value of more than £2m. This is at a withdrawal rate of £1 for every £2 over this threshold.
The rate of IHT remains at 40%.
For a table of the main tax rates and allowances for 2024/2025, see here.
IHT and non-doms
IHT is currently a domicile-based system, relying on domicile status and location of assets. Under the current regime, no inheritance tax is due on non-UK assets of non-doms until they have been UK resident for 15 out of the past 20 tax years. However, with the fundamental reforms to the taxation of non-doms to be introduced with effect from April 2025, the government intends to move IHT to a residence-based system from 6 April 2025, in line with the FIG regime and subject to consultation. For more details of the proposed reforms to the taxation of non-doms, see the Income Tax and NICs section.
This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.
Key contacts
If you have any questions, contact a member of the Inheritance Tax team for assistance:
