Inheritance tax (IHT) in the UK is a levy on the estate of a deceased person. Currently, it stands at 40% for estates valued above a certain threshold, which is £325,000 as of the latest reports. This tax affects only a small proportion of estates—around 4%—because many estates fall below the threshold or benefit from various exemptions, such as those for spouses, civil partners, and direct descendants who inherit the family home.

Despite this, the government has seen a significant increase in revenue from IHT, attributed to the frozen thresholds since 2021 and rising property values. For the fiscal year 2022-23, the UK government collected a record £7.1 billion in inheritance tax. This trend is expected to continue, with even more estates falling into the taxable category by 2028.

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