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Nil-Rate Band (NRB)

The amount you can leave without inheritance tax - currently £325,000. Unused allowance can transfer to a surviving spouse.

The nil-rate band (NRB) is the threshold below which no inheritance tax is payable. Currently set at £325,000 (and frozen until 2028).

How It Works

  • First £325,000 of your estate: 0% IHT
  • Anything above £325,000: 40% IHT
  • Reduced to 36% if 10%+ left to charity

Transferable Nil-Rate Band

If the first spouse to die doesn't use all their nil-rate band (e.g., leaving everything to their spouse), the unused portion transfers to the surviving spouse.

Example: Husband dies leaving everything to wife. His full £325,000 NRB is unused. When wife dies, her estate has £650,000 nil-rate band (her own plus transferred).

Residence Nil-Rate Band

An additional £175,000 allowance applies when leaving your home to direct descendants (children, grandchildren). This is also transferable between spouses.

Combined maximum for a couple: £1 million IHT-free (2 x £325,000 + 2 x £175,000).

Common questions

Has the nil-rate band increased?
No, it's been frozen at £325,000 since 2009 and will remain so until at least 2028. Inflation means more estates now exceed it.
How do I claim transferable nil-rate band?
When the second spouse dies, the executor claims it on the IHT forms (IHT402). You need the first spouse's death certificate and estate details.
Can I transfer nil-rate band if we divorced?
No, only surviving spouses and civil partners can use the transfer. Divorce ends the entitlement.
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