Frequently asked questions

How much can you inherit in the UK without paying tax?

In the UK, there is no tax for the person receiving an inheritance. Any tax due is generally paid by the deceased’s estate, not the beneficiary.

The main tax that applies is Inheritance Tax (IHT) but this only applies if the estate exceeds certain allowances.

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When does inheritance tax apply?

Inheritance tax is normally charged at 40% on the value of an estate above available allowances.

Currently, these allowances include:

• Nil Rate Band (NRB): £325,000 per person
• Residence Nil Rate Band (RNRB): up to £175,000, if a main home is left to direct descendants (subject to conditions)

This means an individual may be able to pass on up to £500,000 tax-free, and potentially more for married couples or civil partners.

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What about business assets?

Some business assets may qualify for Business Property Relief (BPR), which can reduce their value for inheritance tax purposes by 50% or 100%.

Key points:

• BPR generally applies to trading businesses
• It is usually not available for investment-only businesses
• There is no fixed monetary cap, but strict qualifying conditions apply

BPR is changing from April 2026 under the UK Inheritance tax rules. Key details of the updated rules:

• Individual Allowance: A £2.5 million allowance for 100% relief will apply to the combined value of qualifying BPR                 and APR assets for each person.
• Partial Relief: Any qualifying assets above the £2.5 million threshold will receive a 50% relief, resulting in an effective         inheritance tax (IHT) charge of 20% on the excess value.
• Overall: This is in addition to existing IHT allowances, such as the individual nil-rate band of £325,000. A married                   couple can potentially pass on up to £5.65 million tax-free when combining all allowances.

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Are there other taxes when you inherit?

• No income tax is charged when you receive an inheritance
• No capital gains tax (CGT) is payable at the point of death - CGT may apply later, if you sell inherited assets and they           have increased in value since you inherited them

Most people can inherit assets in the UK without paying tax personally. Whether tax applies depends on the size and structure of the deceased’s estate, not on the beneficiary. Proper estate and inheritance planning can significantly reduce the overall tax burden.

Can I just gift 100k to my son

Yes, you can gift £100,000 to your son or daughter in the UK. However, how the gift is made can have inheritance tax (IHT) implications, depending on timing and structure.

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Gifting directly to your son or daughter

If you gift £100,000 directly to your son’s or daughter's bank account, this is treated as a Potentially Exempt Transfer (PET).

• If you survive seven years from the date of the gift, it falls completely outside your estate for inheritance tax.
• If you die within seven years, the gift may be brought back into your estate for IHT purposes.

If death occurs:

• Within 3 years - the full value is considered for IHT within your estate
• After 3 years & unto 7 years - taper relief may reduce the tax payable (not the gift value)
• After 7 years - no inheritance tax applies

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Gifting into a trust

If you gift £100,000 into a trust (such as a discretionary trust), the transfer is treated as a Chargeable Lifetime Transfer (CLT).

• As long as the gift is within your available nil rate band (£325,000), there is no immediate inheritance tax to pay
• If the gift exceeds the nil rate band, an immediate 20% lifetime IHT charge may apply
• The gift is still subject to the seven-year rule for inheritance tax purposes

Trusts can offer greater control over how and when money is accessed, but they come with additional rules, costs, and potential ongoing tax considerations.

You can gift £100,000 to your son or daughter either directly or via a trust, but the inheritance tax treatment differs. Direct gifts are simpler, while trusts can offer more control but involve more complexity. The right approach depends on your wider estate planning goals.

Do you pay Inheritance Tax if you inherit your parents' house?

Whether inheritance tax (IHT) is payable when you inherit your parents’ house depends on the total value of their estate, not just the property, and on whether certain allowances apply.

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When inheritance tax may NOT be payable

If the inherited house was your parent’s main residence and is passed to a direct descendant (such as a child or grandchild), the following allowances may apply:

• Nil Rate Band (NRB): £325,000 per person
• Residence Nil Rate Band (RNRB): £175,000 per person

For a married couple or civil partners, these allowances can usually be combined, meaning up to £1 million of estate value can pass free of inheritance tax, provided:

• The home is left to direct descendants, and
• The estate does not exceed the allowance thresholds (subject to tapering for very large estates).

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When inheritance tax may be payable

Inheritance tax may apply if:

• The total estate value exceeds the available NRB and RNRB allowances
• The property is not passed to direct descendants
• The residence nil rate band has been reduced due to estate size exceeding £2 million
• Part of the estate is left to non-exempt beneficiaries

Any value above the available allowances is generally taxed at 40%.

You do not automatically pay inheritance tax when inheriting your parents’ house. The tax outcome depends on the overall estate value, who the property is left to, and how much of the available inheritance tax allowances can be used.

Use of allowances, gifting, trust structures and suitable investments

Clear strategies to lower your eventual IHT bill

Time to prepare, so your family is not forced into rushed decisions or asset sales later

What is the Inheritance Tax in the UK?

Inheritance Tax (IHT) is a tax charged on a person’s estate when they die, usually at a rate of 40% on the value above available allowances.

An estate includes property, savings, investments, pensions (in some cases), and other assets, after deducting debts.

Currently, these allowances include:

• Nil Rate Band (NRB): £325,000 per person - This is the standard tax-free allowance available to everyone.
• Residence Nil Rate Band (RNRB): up to £175,000, if a main home is left to direct descendants (subject to conditions) - This applies when a main residence is left to direct descendants (such as children or grandchildren) and is subject to certain conditions.

For married couples or civil partners, unused allowances can usually be transferred, meaning up to £1 million can potentially pass free of inheritance tax.

Inheritance Tax in the UK is charged at 40%, but with the right allowances and planning, many families can reduce or even eliminate the tax payable on death.Answer

The Impact

Your family is financially prepared.

Your estate is preserved.

Your hard-earned assets stay where they belong, with the people you love.