We use cookies to allow us and selected partners to improve your experience and our advertising. By continuing to browse you consent to our use of cookies as per our policy which also explains how to change your preferences.

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 rules for married couples and civil partners
Inheritance tax rule changes

Do I need to pay inheritance tax?

If you're single and die during 2016-2017 with an estate worth more than £325,000 (including money, property and investments, but after deducting debts and expenses such as funeral costs), 40% tax will become due on anything above £325,000.

For example, if you leave behind an estate worth £500,000 the tax bill will be £70,000 (40% on £175,000 – the difference between £500,000 and £325,000).

However, if you're married or in a civil partnership, you may be able to leave more than this before paying tax. From April 2016, the threshold will be higher if your estate includes a family home that you leave to your children.

Need help writing a will?

Whether you'd like to do-it-yourself or have us create one for you, Which? Wills can can help - visit our website.

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 explained - this guide contains all the details you need to know about paying this tax.

Need help making a will?

Our friendly wills team are on hand to answer your questions

We’re closed. Open Monday from 9am

Inheritance tax rule changes

In the 2015 Summer Budget, the chancellor George Osborne announced a new transferable main residence allowance, which will gradually increase from £100,000 per person in April 2017 to £175,000 per person by 2020/21.

This is in addition to the main nil-rate band. It will effectively raise the IHT-free allowance to £500,000 per person. Where married couples jointly own a family home and want to leave this to their children, the total IHT exemption will be £1m.