Inheritance tax in the UK

Getting an inheritance in the UK is not so easy. Depending on the tax status of the deceased person, his property can include both British and foreign assets. Often, the dead bequeath to relatives and relatives movable and immovable property, bank accounts, securities etc. However, before receiving an inheritance, the will-executors will have to pay a considerable tax fixed at the state level. That is why you should find out what is the inheritance tax rate in the UK

Inheritance tax in the UK

Many people are interested in what the threshold of inheritance tax in the UK is. For this period of time, this payment is a whopping 40%. This is the figure that is levied on all assets that will pass to children, grandchildren and other people. In addition, you should take into account the retrospective execution of the tax, valid for the next 7 years. According to the legislative base, the inheritance duty is levied on any assets, gifted to someone at a price below the fixed market value or otherwise given to please third parties.

Inheritance tax

Depending on the period of transfer of property, this rate may be slightly reduced. What percentage of inheritance tax in the UK is donated by the deceased, depending on the previous years:

  1. later than 3 years — up to 32%;
  2. later than 4 years — up to 24%;
  3. later than 8 years — 0%.

Despite the presence of such a high tax rate on the inherited fortune, the legislation of the UK provides some benefits in the form of deductions:

  • Personal tax deduction. The first £325 000 of heritage has a zero tax rate. This figure is adopted in the inheritance law in the UK and is strictly regulated by the state, as well as its executive and legislative bodies.
  • Additional tax deduction.

The key role in the formation of the duty is played by the so-called «domicile».

This is a rather contradictory provision in international legal law, which treats the «permanent residence or home» of a person. Often, the domicile is not dependent on the tax residency of the citizen, and an integrated approach is used to determine it accurately.


Local law provides for the presence of British domicile under the following conditions:

  • the person has resided permanently in the UK for the previous 15 of the 20 years;
  • the deceased had a permanent home in the UK for the last 3 years.

The definition of these criteria in the country is carried out by tax specialists who conduct a thorough analysis and several studies.

It should be noted that inheritance tax in the UK for non-residents of the UK is considered on an individual basis.

What is inheritance tax in the UK and What is the inheritance tax rate in the UK?

If the deceased has not left a testament, all property is transferred according to the rules of inheritance:

  • If the total amount of the inheritance is not more than £250 000, it is completely transferred to the spouse.
  • If the total amount of the inheritance is more than £250 000, it is divided between the spouse, children and grandchildren in a certain order.

It should be borne in mind that spouses in the UK are couples who have officially registered their relationship. Both opposite-sex and same-sex partners can be legally married. If for some reason people have not legalized their relationship, the will-executor will have to go to court. As a rule, in this case, the inheritance procedure is somewhat delayed and requires certain material costs.

In this regard, many people during their lifetime make testaments, which include not only spouses and close relatives, but also other people. A competently made testament eliminates controversial issues and any claims from the heirs. In addition, in some cases, such a document significantly reduces the amount of duty, and sometimes completely saves the heirs from paying it.


UK law allows the preparation of a testament in several ways:

  • self-preparation of the document and its signature in the presence of several witnesses;
  • contacting a professional lawyer or testament specialist.

It should be ensured that the willed person chooses 2 trustees, who are called executors. It is they who will subsequently deal with the distribution of all property between the heirs. Often, lawyers, close relatives etc are chosen for this role.

The greater the hereditary mass and the number of will-executors, the more difficult the testament will be. That is why it is best to draw up this document from a qualified specialist. He will make sure that the testament complies with all the laws and regulations of inheritance.

How inheritance tax works in the UK and When you pay inheritance tax in the UK?

Particular attention should be paid to who must pay inheritance tax in the UK and how the posthumous fortune goes to the will-executors. After the official fixation of a person’s death, all his movable and immovable assets are blocked, including bank accounts. After that, the appointed executors must receive a court order approving the testament or giving the right to dispose of the remaining property.

As soon as the document is received, executors need to prepare a package of hereditary documents, a description of the entire posthumous state, its qualified assessment in the form of a monetary equivalent, as well as a tax return. After all debts are paid (including payment for inheritance), the property will pass to the will-executors. The period of this procedure depends on several factors:

  • the total value of the inheritance;
  • type and quantity of property, as well as others.
An important place in the legislation is occupied by the question of whether the spouses pay inheritance tax in the UK? According to the current legal acts, the spouse receives property without a mandatory payment of 40%. The rest of the executors, except for the official husband or wife, are obliged to pay a tax rate in a fixed state amount.

Despite the fact that all the assets of the deceased are temporarily blocked, many banks meet the needs of friends and relatives. In this case, banks are ready to issue part of the amount from the current account of the deceased, covering the organization of the funeral and other urgent expenses.


How to avoid inheritance tax in the UK?

Some wealthy people try to avoid paying inheritance fees in several ways:

  • register movable and immovable property in the spouse’s possession;
  • give assets;
  • leave material goods to charity, which is not taxed etc.

Nevertheless, it should be understood that such transactions are not always legal and in some cases entail liability. To further protect yourself and loved ones, you should find out in advance what the inheritance tax threshold is in the UK and what will happen for deliberate evasion of inheritance tax in the UK. To avoid unpleasant consequences, it is best to consult a local lawyer and study the legislative base.

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