Inheritance tax on death
Inheritance tax is charged on the value of the death estate, reduced by the nil rate bands and the available exemptions and reliefs.
What "Inheritance tax on death" covers
- The death estate is charged at 40% on the value exceeding the available nil rate band (NRB), currently £325,000.
- A residence nil rate band (RNRB) of up to £175,000 is available where a qualifying residence passes to direct descendants.
- The RNRB is tapered away by £1 for every £2 by which the estate exceeds £2 million.
- Any unused NRB and RNRB can be transferred to a surviving spouse or civil partner, up to a further 100%.
- Transfers between spouses or civil partners are exempt, as are gifts to charity, which reduce the taxable estate.
- A reduced rate of 36% (instead of 40%) applies where at least 10% of the net estate is left to charity.
- Business property relief and agricultural property relief can reduce the taxable value of qualifying assets.
Key cases & statutes
The authorities and provisions most likely to matter for this subtopic:
How it's tested in SQE1
SQE1 uses single best answer questions: a short factual scenario, one precise question, and five options of which only one is the best answer on the law applied to the facts. For inheritance tax on death, expect to be asked what the correct legal position is, what a party may or must do, or which outcome follows — with more than one option looking arguable. Reading the facts carefully and eliminating the near-misses is the skill that earns the mark.
Where candidates lose marks
- Ignoring a transferable NRB or RNRB available from a predeceased spouse.
- Forgetting to taper the RNRB where the estate exceeds £2 million.
- Charging the full 40% on gifts that qualify for the charity exemption.
Learn and practise this subtopic
A guided lesson and exam-style questions on inheritance tax on death.
FAQ
Is inheritance tax on death tested on SQE1?
Yes — inheritance tax on death is part of the SQE1 Wills & Administration of Estates syllabus (FLK2) and can appear in single best answer questions.
How is inheritance tax on death examined in SQE1?
SQE1 tests it by application: you're given a realistic scenario and choose the single best answer from five options. The focus is on using the law correctly, not reciting it — knowing the leading authorities (Inheritance Tax Act 1984, nil rate band £325,000) helps.