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inheritance tax exemptions & reliefs

Understanding Inheritance Tax (IHT) Exemptions and Reliefs

Discover how much of your estate can be passed on tax-free - and the reliefs that could reduce your IHT liability significantly.
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inheritance tax exemptions & reliefs

What Are Inheritance Tax Exemptions and Reliefs?

Inheritance Tax (IHT) exemptions and reliefs are legal allowances that reduce the amount of tax payable on your estate. Used correctly, they can lower your IHT bill - or eliminate it entirely.

These are not loopholes; they are HMRC-approved and form a vital part of effective estate planning.

inheritance tax exemptions & reliefs

Key Inheritance Tax (IHT) Exemptions

Nil-Rate Band (NRB)

Every individual has a £325,000 tax-free allowance - this is called the Nil-Rate Band. If your estate is below this, no IHT is due.

Residence Nil-Rate Band (RNRB)

If you pass your home to a direct descendant (child, grandchild), you may get an additional £175,000 tax-free allowance - bringing your total to £500,000.

Spouse or Civil Partner Exemption

Assets passed to a spouse or civil partner are 100% exempt from IHT. They can also inherit your unused allowances.

Charity Exemption

Gifts to UK-registered charities are exempt from inheritance tax - and may reduce your overall IHT rate from 40% to 36% if at least 10% of your estate is donated.

Annual Exemption

You can give away up to £3,000 each tax year free from IHT - plus carry forward unused allowance from the previous year.

Small Gifts Exemption

You can give up to £250 per person per tax year, to as many people as you like, as long as they haven’t benefited from other exemptions.

Gifts for Weddings or Civil Partnerships

You can give between £1,000 and £5,000 depending on your relationship to the recipient.
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inheritance tax exemptions & reliefs

IHT Reliefs That Could Save You More

Business Relief Inheritance Tax

Business Relief

Up to 100% relief on qualifying business assets, including shares in an unlisted company. Must be held for 2+ years.
Agricultural Relief Inheritance Tax

Agricultural Relief

Up to 100% relief on agricultural property used for farming. Must meet strict usage and ownership conditions.

Taper Relief

If you gift assets and survive between 3–7 years, IHT is reduced on a sliding scale. Gifts after 7 years are usually IHT-free.
Business Relief & Agricultural Relief invest in assets that are high risk and can be difficult to sell. The value of the investment and the income from it can fall as well as rise and investors may not get back what they originally invested, even taking into account the tax benefits.
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inheritance tax exemptions & reliefs

How We Help You Maximise These Benefits

Calculate your eligibility for exemptions and reliefs
Identify overlooked areas where tax can be reduced
Recommend actions like gifting, trust use, and pension drawdown
Ensure compliance with HMRC rules
inheritance tax exemptions & reliefs

Want to Reduce Your IHT Bill?

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Our IHT consultations are free and without obligation. If you decide to proceed with our advisers recommendations, a fee may apply but we’ll always be transparent and discuss any costs with you upfront.
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Inheritance Tax Planning, Estate Planning and Trusts are not regulated by the Financial Conduct Authority.

Tax treatment varies according to individual circumstances and is subject to change.

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Inheritance Tax on Pensions is a trading style of Beals Mortgage and Financial Services Ltd an appointed representative of Quilter Financial Services Limited which are authorised and regulated by the Financial Conduct Authority.

The guidance and/or information contained within this website is subject to the UK regulatory regime and is therefore targeted at consumers based in the UK.

Approver Quilter Financial Services Limited August 2025

Registered office address: Unit 1 Fulcrum 2 Solent Way, Whiteley, Fareham, England, PO15 7FN. Registered in England and Wales under reference 08286166

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