Nil rate band (UK inheritance tax)
The nil rate band is the portion of relevant chargeable value taxed at 0% in an inheritance-tax calculation. The available band can be reduced by earlier chargeable transfers within the applicable accumulation period; unused band can sometimes be transferred between spouses or civil partners. The residence nil rate band has separate conditions. For the 2025–26 tax year the standard nil rate band is £325,000; always apply the band and legal rules relevant to the question’s period.
Worked example
For a 2025–26 calculation, assume a £325,000 nil rate band and £75,000 of relevant earlier chargeable transfers that use the band, with no transferable amount. £250,000 remains available for the next relevant transfer before applying the other rules.
Common mistake
Treating £325,000 as an extra cash deduction for every gift without considering earlier transfers, or assuming the separate residence band is automatically available.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | TX (UK) | Direct | June 2026–June 2027 |