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Inheritance tax - how much will I pay?

Learn about inheritance tax, how much you are likely to pay and the ways you can reduce the amount you owe.

In this article
Do I need to pay inheritance tax? Inheritance tax rule changes
Inheritance tax rules for married couples and civil partners  

Do I need to pay inheritance tax?

If you're single and die during 2019-20 with an estate worth more than £325,000, your heirs may face an inheritance tax bill.

Any of your estate above the £325,000 threshold will be taxed at 40%.

However, the threshold is higher if your estate includes a family home that you leave to your children or grandchildren.

If you're married or in a civil partnership, you may also be able to leave more than this before paying tax.

You can find out more in our guide: inheritance tax: thresholds, rates and who pays

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Inheritance tax rule changes

In the 2019-20 tax year, you can leave an additional £150,000 tax-free, provided your estate includes your main home and is being left to a direct descendant.

This is in addition to the main inheritance tax allowance.

It effectively raises the IHT-free allowance to £475,000 per person.

Where married couples jointly own a family home and want to leave this to their children, the total IHT exemption will be £950,000.

You can find out more in our guide to inheritance tax on property


Inheritance tax rules for married couples and civil partners

Married couples and civil partners are allowed to pass their possessions and assets to each other tax-free and, since October 2007, the surviving partner is now allowed to use both tax-free allowances (providing one wasn’t used at the first death).

Where a full allowance remains, this effectively doubles the amount the surviving partner can leave behind tax-free without the need for special tax planning.

However, some people, whose partner died before 21 March 1972 will be caught by a loophole which means they don't get a 'double allowance'.

Find out more: inheritance tax for married couples and civil partners - this guide contains all the details you need to know about paying this tax.