What is the Inheritance Tax (IHT) Threshold for 2024/2025?
For the 2024/2025 tax year, the Inheritance Tax (IHT) threshold remains unchanged at £325,000. This is the amount of an estate that can be passed on without incurring Inheritance Tax.
Key Threshold Details:
- Standard Threshold (Nil-Rate Band): The IHT threshold is £325,000. If your estate’s value is below this amount, no Inheritance Tax is due.
- Tax Rate on Excess: Any value above £325,000 may be subject to Inheritance Tax at a rate of 40%.
Additional Allowances:
- Spouse or Civil Partner Transfers: Transfers to a spouse or civil partner are exempt from IHT. Furthermore, any unused portion of the £325,000 threshold can be transferred to your surviving spouse or civil partner, effectively increasing their IHT-free allowance to £650,000.
- Residence Nil-Rate Band: If you pass on your main residence to direct descendants (children or grandchildren), you may qualify for an additional allowance called the Residence Nil-Rate Band (RNRB), which is £175,000 for the 2024/2025 tax year. This increases your total potential IHT-free threshold to £500,000 (or £1 million for married couples and civil partners).
Planning to Minimise Inheritance Tax
Careful planning can help you reduce or eliminate your IHT liability, ensuring more of your estate is passed on to your heirs. Merranti Accounting offers expert guidance on inheritance tax planning, helping you make the most of available reliefs and exemptions.
Contact us today to discuss your IHT planning options and ensure your estate is managed tax-efficiently.
