How to Use UK Inheritance Tax Rules to Protect Your Legacy

Nil-Rate Band: Everyone has a tax-free allowance (called the nil-rate band). As of now, this is £325,000. Any value above that is taxed at 40%.

Residence Nil-Rate Band: If you pass on your main home to direct descendants (like children or grandchildren), you get an extra tax-free allowance. Currently, that is up to £175,000.

Spousal Exemption: Anything you leave to your spouse or civil partner is completely free of inheritance tax—no limit.

Unused Allowances: If your spouse or partner passes away, you can inherit their unused nil-rate band and residence band. This means a couple can effectively pass on up to £1 million free from inheritance tax.

Mirror Wills: Many couples create mirror WILLS (identical wills), which ensure both partners maximize the tax-free allowances when they pass on.

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