Inheritance Tax UK

About Inheritance Tax UK

UK inheritance tax, currently at 40 percent on estates over 325,000, was introduced in its modern form in 1986, replacing capital transfer tax. The tax has numerous exemptions, including transfers between spouses, gifts to charity, and business property relief. The residence nil rate band adds up to 175,000 when a main residence is passed to descendants. Despite the high headline rate, inheritance tax affects only about 4 percent of estates. The tax is widely disliked and seen as a death tax. Critics argue it punishes saving and forces the sale of family homes. Proponents argue it promotes social mobility and prevents the concentration of wealth. The Office of Tax Simplification has recommended reforms to simplify the tax but no major changes have been made.