UK inheritance tax 2026

UK inheritance tax is charged on the estate, not on the heir. Above the nil-rate band of £325,000 the rate is 40%; for a family home passing to children or grandchildren up to £175,000 more is free. How that works out in a real case, and what an heir abroad must do with a house in England, is in our piece on UK inheritance tax.

Since 6 April 2025 residence decides what falls into UK tax. Anyone UK resident in at least ten of the last twenty tax years is a long-term resident, and then the worldwide estate counts. Anyone who has not been here that long pays only on UK assets, such as a flat in London or a UK bank account. The same piece explains the reform, its transitional rules and the years after leaving.

The same estate can trigger tax in two countries. European countries go about it very differently: some tax by the residence of the person who died, some by the residence of the heir, some also by nationality for a while after you have left, and some have no inheritance tax at all. Where both the UK and your home country charge, relief usually comes from a credit in one of them; only a few countries have a separate estate tax treaty with the UK.

So the question is never just the UK rate. It is which country taxes first, which credits, and whether the heir's country adds a charge of its own. We map the UK side precisely and give you the questions for your adviser at home; the treaty mechanics are in our piece on the UK's tax treaties.

Lifetime gifts usually escape UK tax if the giver lives another seven years; if they die sooner, a taper applies. The details are in gifts and the seven-year rule. After the 2025 reforms trusts are no longer a self-runner, and since April 2026 business owners and farmers face a cap on full relief. A separation has tax consequences too, and they are worth knowing before the lawyers get going.