What is the rate of inheritance tax in the UK?
Answered 11 March 2026
What the law says
The standard rate of UK inheritance tax (IHT) is structured as a nil rate band (charged at 0%) and a 40% rate on the excess above that band, as set out in Schedule 1 to the Inheritance Tax Act 1984 (IHTA 1984).
The current nil-rate band threshold is £325,000, with 40% charged on the portion of value exceeding that amount. This table has been in effect for chargeable transfers made on or after 6 April 2010.
In summary, the Schedule 1 table reads:
| Portion of value | Rate |
|---|---|
| £0 – £325,000 | Nil |
| Above £325,000 | 40% |
A reduced rate of 36% applies where at least 10% of a person's net estate is left to charity. This is provided for by Schedule 1A to IHTA 1984 and applies only to deaths occurring on or after 6 April 2012.
Additionally, an increased nil-rate band (the "residence nil-rate band") is available under section 8D of IHTA 1984 where an interest in a home passes to descendants on death.
HMRC guidance / practice
HMRC confirms that the 36% reduced rate applies where the "charitable giving condition" in Schedule 1A IHTA 1984 is met — i.e., at least 10% of the net estate is left to charity. The reduced rate applies only to charges arising on death (not lifetime transfers). HMRC has developed an online charitable legacy calculator and a dedicated supplementary form (IHT430) to assist taxpayers in calculating whether the condition is met.
Citation sources
Introduction 1. This is an appeal against 10 Notices of Determination issued under s.221 of the Inheritance Tax Act 1984 (“IHTA”). The notices were issued to the executors of Mrs Hilda Marks deceased and relate to matters contained in her Inheritance Tax Account submitted following her death on 1 October 2015. 2. There are two issues for determination. These are: (1) Whether the charitable giving condition in Schedule 1A, IHTA applies so as to reduce the rate of inheritance tax (“IHT”) payable b
To encourage people to leave part of their estate to charity, IHTA84/Sch1A provides that where at least 10% of a person’s net estate is left to charity, the rate of tax charged is reduced to 36%. In the legislation the word charity has the normal meaning for Inheritance Tax purposes (IHTM11112) and includes registered community amateur sports clubs and organisations that meet the requirements for being a charity. The reduced rate of tax only applies to charges that arise on death. To qualify for
PART 5 Inheritance tax etc Inheritance tax: increased nil-rate band 93 Schedule 15 contains provision in connection with the increased nil-rate band provided for by section 8D of IHTA 1984 (extra nil-rate band on death if interest in home goes to descendants etc).
Part 1 Charges, rates etc Inheritance tax Rate bands 8 1 The Table substituted in Schedule 1 to IHTA 1984 by section 155(1)(b) and (4) of FA 2006 (which provides for a rate of nil per cent on such portion of the value concerned as does not exceed £325,000 and a rate of 40 per cent on such portion as exceeds that amount) has effect in relation to chargeable transfers made on or after 6 April 2010. 2 Accordingly, omit— a in IHTA 1984, the Table substituted in Schedule 1 in relation to chargeable t