UK INHERITANCE TAX RATES AND THRESHOLDS
This article gives you all you need to know about UK inheritance tax rates and thresholds. This information is for you if you need to get information about how inheritance tax is applied, and has data going back many years.
- Current position
- Why you need this data – an example
- Historical UK inheritance tax rates and thresholds
Current UK inheritance tax rates
The current UK inheritance tax rates are as follows:
- Assets up to £325,000 are taxed at 0%.
- Married couples and civil partners can use both inheritance tax thresholds on second death, making a total of £650,000.
- Assets over £325,000 (or £650,000) are taxed at 40%.
- Certain lifetime chargeable transfers are taxed at 20% at the date of transfer, and 20% on later death.
Why you need this data – an example
You might need to check the rate of inheritance tax if one spouse pre-deceased another. Let’s look at an example:
Anne has just died. Her husband Bill died on 1st May 2005. In Bill’s will he gave £110,000 to his children, and the rest to Anne. Therefore, Bill used £110,000 of his inheritance tax threshold on his death with his gift to his children. His other assets passed to Anne tax free under the UK domiciled spouse exemption. Bill has used £110,000 out of his £275,000 inheritance tax threshold or 40%.
When Anne dies her estate can use her inheritance tax threshold, plus the remainder of Bill’s. Therefore she has the following remaining inheritance tax threshold:
- Anne’s inheritance tax threshold – £325,000
- Bill’s inheritance tax threshold – 60% x £325,000 = £195,000
Bill had used 40% of his inheritance tax threshold. therefore, Anne can use 60% of the current inheritance tax threshold on her death.
- Total inheritance tax threshold = £520,000
Historical UK inheritance tax rates and thresholds
Find the year you are interested in. The UK inheritance tax threshold is shown as appropriate. Assets up to the inheritance tax threshold are taxed at 0%. Assets over the inheritance tax threshold are usually taxed at 40%.
|Date From||Date To||Inheritance tax threshold|
|6th April 2009||5th April 2015||£325,000|
|6th April 2008||5th April 2009||£312,000|
|6th April 2007||5th April 2008||£300,000|
|6th April 2006||5th April 2007||£285,000|
|6th April 2005||5th April 2006||£275,000|
|6th April 2004||5th April 2005||£263,000|
|6th April 2003||5th April 2004||£255,000|
|6th April 2002||5th April 2003||£250,000|
|6th April 2001||5th April 2002||£242,000|
|6th April 2000||5th April 2001||£234,000|
If you need to examine UK inheritance tax rates for previous years, go to the HMRC page on the subject.
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