🇬🇧 Updated for tax year 2025/26 — HMRC confirmed rates
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Estate PlanningFebruary 2025 · 8 min read

Inheritance Tax Planning: Protect Your Estate

NRB, RNRB and strategies to reduce IHT.

The Nil-Rate Band


The first £325,000 of an estate is free from IHT (the Nil-Rate Band). Above this, the rate is 40%. The NRB has been frozen since 2009.


Residence Nil-Rate Band


An additional £175,000 applies when:

  • The estate includes a residential property
  • It passes to direct descendants (children/grandchildren)
  • The estate is worth no more than £2 million

    • This gives a combined threshold of £500,000 per individual, and up to £1 million for married couples.


    The 7-Year Rule


    Gifts made more than 7 years before death are generally exempt from IHT. Gifts within 7 years may be subject to taper relief (40% rate reduces to 8% at 6–7 years).


    Annual Gift Exemptions


  • £3,000 per year completely free of IHT
  • Carry forward one previous year's unused allowance (up to £6,000 in one year)
  • Gifts from regular income are also exempt
    • Disclaimer: This guide is for information only and does not constitute tax or financial advice. Tax rules are complex and subject to change. Always seek professional advice for your specific circumstances.