Tax rates and allowances
The Government has previously announced that the inheritance tax (IHT) threshold will remain frozen at £325,000 until 2021/2022. The rate remains at 40%.
In April 2017, the Government introduced an additional nil-rate band when a residence is passed on death to a direct descendant. Initially this was set at £100,000, but rises to £175,000 in 2020/21. 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.
See our table of the main tax rates and allowances for 2020/2021.
Key contacts
If you have any questions, contact a member of the Inheritance tax team for assistance:
