What is the nil rate band?

The nil rate band (NRB), also known as the inheritance tax (IHT) threshold, is the amount up to which an estate has no IHT to pay. Each person’s estate can benefit from the NRB. A ‘residence nil rate band’ may be available in addition to the NRB. Any unused NRB and residence nil rate band may be transferred to a surviving spouse or civil partner.

Each individual has their own NRB which is £325,000 for 2023/24. Any part of the estate up to the NRB threshold is chargeable to IHT at a rate of 0%. Any part of the estate that exceeds the NRB threshold is usually chargeable to IHT on death at 40%.

The NRB applies to the taxable, non-exempt estate passing on death together with any taxable gifts made within the seven years before death.

For tax advice, consult a qualified accountant.