Comparing Inheritance Tax in the UK, US, Canada and Europe

Whether you own a home, have savings, or hold investments, understanding how inheritance tax works — not just in the UK but across major economies — is essential for protecting your family’s wealth. The Organisation for Economic Co-operation and Development (OECD) tax database provides valuable insights into the inheritance tax systems across various countries, and the contrasts are striking.

In this article, we compare the inheritance tax systems in the UK, US, Canada, and Europe, highlighting the practical differences and what they mean for ordinary families — particularly those with assets in more than one country. England invented trust law over 800 years ago, yet many people still don’t fully understand how our inheritance tax system works, let alone how it compares internationally. By setting out these differences clearly, we aim to help you make more informed decisions about protecting your estate.

Key Takeaways

• The OECD tax database offers a comprehensive overview of inheritance tax systems worldwide — and the UK’s system is one of the harshest for ordinary homeowners.
• Understanding inheritance tax differences is vital for effective estate planning, especially if you have family or assets overseas.
• The UK, US, Canada, and Europe have fundamentally different approaches to taxing wealth on death.
• The UK’s nil rate band has been frozen at £325,000 since 2009 — meaning inflation has dragged thousands of ordinary families into the inheritance tax net.
• Comparing inheritance tax systems internationally highlights just how much proactive planning matters in the UK.

Introduction to Inheritance Tax

As we explore the complexities of inheritance tax, it becomes clear that different nations have remarkably different approaches to taxing wealth on death. Inheritance tax is a significant consideration for anyone planning their estate, directly affecting how much of your hard-earned wealth actually reaches your beneficiaries.

Definition and Purpose of Inheritance Tax

Inheritance tax (IHT) is a tax levied on the estate of a deceased person — that is, the total value of everything they owned at the time of death, minus allowable debts and exemptions. In the UK, IHT is charged on the estate itself before distribution to beneficiaries, at a rate of 40% on everything above the nil rate band.

It’s important to understand the distinction between systems. In the UK, the tax is levied on the deceased’s estate as a whole — the executors must pay the bill before beneficiaries receive anything. In some other countries, inheritance tax is charged on individual beneficiaries based on what they receive, often with different rates depending on their relationship to the deceased. The practical impact on families can be dramatically different depending on which system applies.

Overview of Inheritance Tax in Different Countries

Different countries have varying approaches to inheritance tax, and the differences are far more significant than most people realise:

• The United Kingdom charges IHT at 40% on estates above the nil rate band of £325,000 (frozen since 2009 and confirmed frozen until at least April 2031). An additional residence nil rate band of £175,000 is available if a qualifying home is passed to direct descendants — but this tapers away for estates above £2,000,000.
• The United States has a federal estate tax at 40%, but with a vastly higher threshold — currently around $13 million per individual. This means fewer than 1% of US estates pay any federal estate tax at all. Some individual states also impose their own estate or inheritance taxes.
• Canada does not have a federal inheritance tax at all. Instead, a deemed disposition at death triggers capital gains tax on appreciated assets — a fundamentally different approach.
• European countries exhibit a wide range of practices, from no inheritance tax in some nations (such as Sweden and Portugal) to complex progressive regimes in others (such as France and Germany).

Understanding these differences is crucial for effective estate planning, especially for individuals with assets or beneficiaries in multiple countries. For UK residents, the frozen nil rate band means that rising property values have pulled hundreds of thousands of ordinary homeowners into the IHT net — something that simply doesn’t happen to the same extent in most other developed nations.

Inheritance Tax in the United Kingdom

Inheritance tax in the UK is a multifaceted system involving specific rates, allowances, and exemptions that need careful consideration. Understanding the nuances of IHT is crucial for ensuring that your assets are distributed according to your wishes while minimising the tax burden on your beneficiaries. As Mike Pugh often says, “Trusts are not just for the rich — they’re for the smart.” And that starts with understanding the rules.

Current Rates and Allowances

The UK inheritance tax rate stands at 40% on the taxable estate above the nil rate band. This is one of the highest rates among OECD countries, and crucially, it bites at a much lower threshold than in many comparable nations. The nil rate band (NRB) is £325,000 per person — and it has been frozen at this level since 6 April 2009. It is now confirmed frozen until at least April 2031, meaning over two decades without any increase despite significant inflation and rising property values.

An additional residence nil rate band (RNRB) of up to £175,000 is available if you leave a qualifying residential property to direct descendants — that means children, grandchildren, or step-children. It is not available if you leave your home to siblings, nieces, nephews, friends, or charities. The RNRB also tapers away by £1 for every £2 that the estate’s value exceeds £2,000,000.

For married couples and civil partners, unused NRB and RNRB can transfer to the surviving spouse, giving a combined maximum of £1,000,000 (£650,000 NRB + £350,000 RNRB) before IHT applies. If at least 10% of the net estate is left to charity, the IHT rate reduces from 40% to 36%.

With the average home in England now worth around £290,000, many ordinary homeowners — once all savings, pensions, and possessions are added — find themselves well above the nil rate band. You can read more about the inheritance tax limit in the UK to understand how these thresholds apply to your situation.

Exemptions and Reliefs

There are several exemptions and reliefs available that can reduce the inheritance tax liability. The most important include:

• Spouse/Civil Partner Exemption: Transfers between married couples and civil partners are completely exempt from IHT, with no upper limit. This is the single most valuable exemption in the UK system.
• Agricultural Property Relief (APR): This relief can exempt agricultural property from IHT, provided certain conditions are met, such as the property being used for agricultural purposes. However, from April 2026, APR is being capped at 100% relief on the first £1 million of combined agricultural and business property, with 50% relief on the excess.
• Business Property Relief (BPR): Business assets, including shares in unlisted companies, can qualify for BPR, potentially reducing the IHT burden significantly. The same April 2026 cap applies to BPR.
• Gifts to Charities: Gifts to registered charities are exempt from IHT and can also reduce the rate on the remaining estate to 36% if they account for at least 10% of the net estate.
• Annual Gift Exemption: You can give away £3,000 per tax year (with one year’s carry-forward) free of IHT. Small gifts of up to £250 per recipient are also exempt.
• Potentially Exempt Transfers (PETs): Gifts to individuals become fully exempt from IHT if the donor survives for seven years. If the donor dies within seven years, taper relief may reduce the tax payable — but only on gifts exceeding the nil rate band.
• Normal Expenditure Out of Income: Regular gifts made from surplus income (not capital) can be fully exempt, provided they are properly documented and do not reduce the donor’s standard of living.

Understanding these exemptions and reliefs is key to effective estate planning. For a detailed comparison of inheritance tax across different countries, you can visit this resource to gain insights into how the UK’s system compares internationally.

Process of Paying Inheritance Tax

The process of paying IHT involves several steps, starting with determining the total value of the estate. Executors or personal representatives are responsible for reporting the estate’s value to HMRC and paying any IHT due — typically within six months of the end of the month in which the person died. Interest is charged on late payments.

The tax must generally be paid before a Grant of Probate is issued by the Probate Registry, which creates a practical challenge: executors need to find the money to pay IHT before they can access the deceased’s assets. For estates that include property but limited liquid cash, this can create significant pressure — sometimes forcing a rushed property sale. Some banks offer executors’ loans or direct payment schemes to HMRC to help bridge this gap.

During the probate process, all sole-name assets — bank accounts, property, investments — are effectively frozen. The full probate process typically takes 3 to 12 months, and where property needs to be sold, it can take 9 to 18 months or more. This is one of the key reasons that lifetime trusts are increasingly popular for UK families: trust assets bypass probate entirely, meaning trustees can act immediately on the settlor’s death without waiting for a Grant.

Inheritance Tax in the United States

The US approach to taxing wealth on death is fundamentally different from the UK’s, and understanding these differences is important for anyone with connections to both countries.

State vs Federal Inheritance Tax

The US has a federal estate tax system that applies uniformly across the country, but with a dramatically higher threshold than the UK. The current federal exemption is approximately $13 million per individual (around £10.3 million), meaning that the vast majority of American families pay no federal estate tax at all.

However, some individual states also impose their own estate tax or inheritance tax, with lower thresholds. For instance, states like New York, Maryland, and Massachusetts have their own estate tax laws with different thresholds and rates. A handful of states — including Iowa, Kentucky, and Pennsylvania — levy a separate inheritance tax based on the beneficiary’s relationship to the deceased. This dual federal/state system creates complexity that is quite different from the UK’s single, centralised IHT system.

Exemptions and Deductions

The US estate tax system provides several important exemptions and deductions:

Key exemptions and deductions include:

• Unified credit: The federal lifetime exemption (currently approximately $13 million per person) is “portable” between spouses, meaning a married couple can effectively shelter around $26 million from federal estate tax. This is in stark contrast to the UK’s combined maximum of £1,000,000 for a married couple.
• Unlimited marital deduction: The US allows an unlimited transfer of assets between spouses without triggering any estate tax — similar to the UK’s spouse exemption, though the UK also extends this to civil partners.
• Charitable deductions: Bequests to qualifying charities are fully deductible from the taxable estate, reducing or eliminating the estate tax liability.
• “Step-up” in basis: Inherited assets receive a “step-up” in cost basis to their fair market value at the date of death, eliminating capital gains tax on any appreciation during the deceased’s lifetime. The UK does not have an equivalent — inherited assets are generally treated as acquired at probate value for Capital Gains Tax purposes, but with a specific base cost.

Major Differences from the UK

The most significant difference between the US and UK systems is the threshold at which the tax bites. The US federal exemption of approximately $13 million means that fewer than 0.1% of US estates pay any federal estate tax. In the UK, with a nil rate band of just £325,000 (frozen since 2009), approximately 4-7% of estates are liable for IHT each year — and that proportion is growing as property values rise while the threshold remains static.

To put this in perspective: a UK couple who own a home worth £400,000, have savings of £150,000, and modest pensions could easily face an IHT bill. An equivalent American couple with the same assets would be nowhere near the US federal threshold.

Another key difference is that the US system of “portability” allows the full unused federal exemption to pass automatically to a surviving spouse. While the UK does allow transfer of unused NRB and RNRB between spouses, the amounts involved are dramatically smaller.

Understanding these differences is essential for individuals with assets in both countries, as they must navigate the complexities of both tax systems — and potentially the UK-US double taxation treaty — to ensure they are not paying more tax than necessary.

Inheritance Tax in Canada

Canada takes a fundamentally different approach to taxing wealth on death — one that surprises many UK residents when they first learn about it.

No Federal Inheritance Tax

Canada does not impose a federal inheritance tax, estate tax, or death duty. Beneficiaries do not pay any tax on the inheritance they receive. This is a stark contrast to the UK, where 40% of everything above £325,000 goes to HMRC. However, the absence of a specific inheritance tax does not mean that death is a tax-free event in Canada — it simply means the tax mechanism is different.

Capital Gains Tax Implications

Instead of inheritance tax, Canada imposes a “deemed disposition” at death. This means that the deceased is treated as having sold all their capital property at fair market value immediately before death. Any capital gains accrued during their lifetime become taxable on the deceased’s final tax return.

For example, if a deceased person owned shares that were originally purchased for C$50,000 but were worth C$120,000 at the time of death, capital gains tax would be payable on the C$70,000 gain — even though no actual sale took place. Key points to consider:

• The tax is calculated based on the deemed proceeds at death minus the original cost base — it is a tax on appreciation, not on the total value of the asset.
• The principal residence exemption means that a person’s main home is typically exempt from capital gains tax, even on the deemed disposition at death. This is a significant advantage compared to the UK, where the family home is fully included in the IHT calculation.
• RRSPs and RRIFs (Canada’s equivalents of pensions and SIPPs) are treated as fully taxable income on death unless they roll over to a surviving spouse or qualifying dependent.

Provincial Variations in Taxation

While Canada does not have a federal inheritance tax, different provinces impose varying probate fees (known as “estate administration tax” in Ontario). These can vary significantly across provinces, affecting the overall cost of administering an estate:

1. Probate fees vary by province — British Columbia and Ontario have percentage-based fees that can be substantial on larger estates, while Alberta and Quebec have minimal or no probate fees.
2. Some provinces offer more generous personal tax credits that can offset the deemed disposition tax on the final return.
3. Provincial tax laws can change, so staying informed is vital for effective estate planning — particularly for anyone with assets in both Canada and the UK.

The Canadian system’s focus on capital gains rather than a flat estate tax means that the overall tax burden on death can be significantly lower than in the UK — particularly for families whose wealth is primarily in their home. Understanding these nuances is essential for UK residents with Canadian connections, or vice versa.

Inheritance Tax in European Countries

Inheritance tax practices vary significantly across European countries, reflecting diverse cultural and economic approaches to wealth transfer. For UK families considering moving assets or retiring abroad, these differences can have substantial financial implications.

Common Practices Across Europe

Many European countries impose some form of inheritance tax, but the rates, allowances, and structures differ enormously:

• Some countries offer generous exemption thresholds based on the relationship between the deceased and the beneficiary — close family members often pay little or nothing, while distant relatives or unrelated beneficiaries pay significantly more.
• Others have progressive tax rates, where larger inheritances are taxed at higher rates, but with substantial exemptions for spouses and children that often far exceed the UK’s nil rate band in practical terms.
• Several European countries — including Sweden, Norway, Austria, and Portugal — have abolished inheritance tax entirely, relying instead on other forms of taxation.

Unlike the UK’s relatively simple (if harsh) system of a flat 40% rate above the NRB, many European systems use complex graduated scales that depend on both the size of the inheritance and the beneficiary’s relationship to the deceased.

Notable Differences from the UK and US

When comparing European inheritance tax practices to those in the UK and US, several important differences emerge:

• Exemption Thresholds: Several European countries provide significantly higher exemptions for children and spouses than the UK. For example, in Germany, a spouse can inherit up to €500,000 tax-free, and each child can inherit up to €400,000 tax-free — far more generous than the UK’s £325,000 NRB (which must cover all beneficiaries combined).
• Tax Rates: While the UK applies a flat 40% rate, many European countries use progressive rates that start much lower. France, for example, charges just 5% on the first €8,072 inherited by a child.
• Family Exemptions: Many European countries draw sharp distinctions between family and non-family beneficiaries, with some offering near-total exemption for transfers between spouses and to children.

Case Studies: France and Germany

Let’s examine the inheritance tax regimes in France and Germany as practical case studies for comparison with the UK.

France

France has a complex inheritance tax system with varying tax rates depending on the relationship between the deceased and the beneficiary. Each child receives a personal allowance of €100,000, and tax rates range from 5% to 45% on inheritance above that threshold. Spouses and civil partners are completely exempt from French inheritance tax. France also has forced heirship rules (réserve héréditaire) that require a portion of the estate to pass to children, limiting testamentary freedom — something that does not apply in England and Wales, where you are free to leave your estate to anyone.

Germany

Germany’s inheritance tax system is characterised by generous exemption thresholds for close family members but higher rates for larger inheritances and more distant beneficiaries. Spouses can inherit up to €500,000 tax-free, and each child can inherit up to €400,000 tax-free. Tax rates vary from 7% to 50% depending on the size of the taxable inheritance and the beneficiary’s tax class. Germany also offers substantial relief for business assets, though this has been tightened in recent years.

Comparative Analysis of UK and US Inheritance Tax

A comparative look at inheritance tax in the UK and US reveals just how differently these two countries treat wealth on death — and why UK families need to be particularly proactive about planning.

Rates and Thresholds: A Side-by-Side View

Both the UK and US charge a headline rate of 40% on taxable estates. But the threshold at which the tax applies tells a completely different story.

The US threshold is roughly 40 times higher than the UK’s. While a married UK couple can combine their allowances for a maximum of £1,000,000 (including the RNRB), a married US couple can shelter approximately $26 million. The result is that IHT in the UK catches ordinary homeowners, while the US federal estate tax is genuinely a tax on the very wealthy.

Both countries offer unlimited exemptions for transfers between spouses. Both allow charitable deductions. But the scale of the difference in thresholds means that the UK system has a far broader impact on middle-income families.

Impact on Estate Planning Strategies

The differences in inheritance tax between the UK and US significantly impact how families need to plan. In the UK, the low and frozen threshold means that proactive planning is not a luxury — it’s a necessity for any family with a home and some savings.

• Lifetime gifts: Making gifts during your lifetime can reduce your estate’s value. In the UK, gifts to individuals become potentially exempt transfers (PETs) that fall outside the estate entirely if you survive seven years. However, transfers into discretionary trusts are chargeable lifetime transfers (CLTs), not PETs — a distinction that catches many people out.
• Trusts: Lifetime trusts — particularly irrevocable discretionary trusts — are a cornerstone of UK inheritance tax planning. By placing assets into trust, you can remove them from your taxable estate, protect them from care fees and divorce, and bypass probate delays. Trusts are not just for the rich — they’re for the smart.
• Specialist advice: The law — like medicine — is broad. You wouldn’t want your GP doing surgery. Given the complexity of IHT rules, particularly around trusts, the seven-year rule, and the interaction between NRB and RNRB, working with a specialist is essential.

Effect on Wealth Distribution

Inheritance tax affects wealth distribution in both countries, but the practical impact is far more significant in the UK. With the nil rate band frozen since 2009 while average UK house prices have risen to around £270,000-£290,000, many families who would never have considered themselves “wealthy” now face a substantial IHT bill.

Key Considerations:

• Understanding the domicile rules in the UK (which determine whether your worldwide assets are subject to IHT) and residency considerations in the US.
• Utilising the UK-US double taxation convention to avoid being taxed twice on the same assets.
• Regularly reviewing and updating your estate plan to reflect changes in tax laws — particularly given the freezing of the NRB until 2031, the upcoming changes to BPR/APR from April 2026, and inherited pensions becoming liable for IHT from April 2027.

By understanding the differences in inheritance tax between the UK and US, individuals can take practical steps to ensure more wealth is passed to their beneficiaries rather than being lost to HMRC. As Mike Pugh puts it: “Not losing the family money provides the greatest peace of mind above all else.”

Residency and Inheritance Tax Implications

Understanding the implications of residency and domicile on inheritance tax is crucial for individuals with assets in multiple countries. Where you are considered “domiciled” — not just where you live — can determine whether your worldwide estate or only your UK assets are subject to IHT.

Domicile Rules in the UK

In the UK, an individual’s domicile status plays a crucial role in determining their inheritance tax liability. Domicile is a legal concept that is broadly your permanent home — the country you consider your long-term base — though it is a complex area that involves factors including your origins, intentions, and patterns of residence.

For IHT purposes, being considered “domiciled” in the UK means that your worldwide assets — wherever they are located — are subject to UK inheritance tax. The three types of domicile are:

• Domicile of origin: Acquired at birth, usually following your father’s domicile (or mother’s if parents were unmarried)
• Domicile of choice: Acquired by making a new country your permanent home with the intention of remaining there permanently or indefinitely
• Deemed domicile: Under UK tax rules, you are treated as UK-domiciled for IHT purposes if you have been UK resident for at least 15 of the previous 20 tax years, even if you retain a foreign domicile of origin

The UK government has been tightening the rules around non-domiciled status in recent years, and from April 2025, the traditional “non-dom” regime has been replaced with a new residence-based system. This is a fast-moving area of law where specialist advice is essential.

The complexity of domicile underscores the need for professional advice when dealing with cross-border inheritance tax implications.

Residency Considerations in the US

In the United States, the federal estate tax applies to US citizens and US-domiciled residents on their worldwide assets, regardless of where they live. For non-US citizens who are not domiciled in the US, the federal estate tax applies only to US-situated assets (such as US real estate and US shares), with a much lower exemption of approximately $60,000.

US domicile for estate tax purposes is determined by the individual’s intent to make the US their permanent home. Factors considered include:

• Where the individual maintains a permanent home
• The length and nature of stays in the US
• Family, business, and social ties to the US
• Visa or immigration status

This highlights the importance of understanding the specific rules of each jurisdiction — US “domicile” for estate tax purposes is determined differently from UK “domicile” for IHT purposes, which can create unexpected tax exposures.

International Tax Treaties and Their Effects

International tax treaties play a crucial role in determining inheritance tax liability for individuals with assets in multiple countries. These treaties aim to prevent double taxation and establish clear rules about which country has the primary right to tax.

The UK has a double taxation convention with the US specifically covering estate and gift taxes, as well as treaties with several other countries including France, the Netherlands, India, Ireland, Italy, Pakistan, South Africa, Sweden, and Switzerland. However, the UK does not have inheritance tax treaties with many major countries — including Canada, Germany, Spain, and Australia — which can create complications.

Where no treaty exists, unilateral relief may be available to prevent the same assets being taxed twice, but this is not guaranteed to eliminate double taxation entirely.

When planning for inheritance tax across borders, it is essential to consider the impact of these treaties — and their absence — on your global assets. Professional advice from a solicitor or tax adviser with cross-border expertise is crucial in navigating these complex rules. The interaction between UK domicile rules, overseas tax systems, and available treaty relief can have a dramatic impact on the overall IHT bill.

Planning for Inheritance Tax

Effective planning is key to minimising inheritance tax liability, ensuring more of your estate goes to your loved ones rather than to HMRC. As we have seen, the UK’s inheritance tax system — with its frozen nil rate band and 40% rate — is one of the harshest among developed nations for ordinary families. But that also means there is more to be gained from planning properly.

Strategies for Minimising Inheritance Tax Liability

There are several proven strategies that can be employed to minimise IHT liability in the UK:

Lifetime gifts: Gifts to individuals are potentially exempt transfers (PETs). If you survive for seven years after making the gift, it falls completely outside your estate for IHT purposes. If you die within seven years, taper relief may reduce the tax — but only on gifts that exceed the nil rate band of £325,000. It’s important to start the seven-year clock as early as possible.

Annual exemptions: You can give away £3,000 per tax year free of IHT (with one year’s carry-forward if unused). Small gifts of up to £250 per recipient per year are also exempt, as are wedding gifts (£5,000 from a parent, £2,500 from a grandparent, £1,000 from anyone else).

Normal expenditure out of income: Regular gifts made from surplus income — not capital — can be fully exempt from IHT, provided they are properly documented and do not reduce your standard of living. This is one of the most underused exemptions available.

Charitable giving: Gifts to registered charities are exempt from IHT. If at least 10% of your net estate is left to charity, the IHT rate on the remaining estate reduces from 40% to 36%.

• Make lifetime gifts to beneficiaries and start the seven-year clock.
• Use your annual exemptions consistently — don’t let them go to waste.
• Document gifts from surplus income carefully.
• Consider charitable legacies to reduce the overall IHT rate.

Trusts and Their Uses

Trusts are one of the most powerful tools in UK inheritance tax planning. England invented trust law over 800 years ago, and trusts remain at the heart of effective estate protection today. By placing assets into the right type of trust, you can remove them from your taxable estate, protect them from care fees and family disputes, and bypass probate delays entirely.

It’s important to understand that in English law, a trust is a legal arrangement, not a legal entity. The trustees are the legal owners of the trust property, and they hold it for the benefit of the beneficiaries according to the terms of the trust deed.

Types of Trusts:

The discretionary trust is by far the most commonly used structure for family protection — accounting for approximately 98-99% of the trusts Mike Pugh creates. The reason is simple: because no beneficiary has a legal right to the trust assets, those assets are protected from care fee assessments, divorce claims, and creditors. A well-structured irrevocable discretionary trust, set up years before any foreseeable need for care, is one of the most effective ways to protect the family home.

It’s worth noting that a revocable trust provides no IHT benefit — HMRC treats the assets as still belonging to the settlor. For genuine asset protection and IHT planning, the trust must be irrevocable.

Professional Advice and Planning

Given the complexity of inheritance tax rules and the ongoing changes to UK tax legislation — including the freezing of the NRB until 2031, changes to BPR/APR from April 2026, and inherited pensions becoming subject to IHT from April 2027 — seeking specialist professional advice is essential.

A general solicitor or high-street will writer may not have the depth of knowledge needed for effective trust and IHT planning. The law — like medicine — is broad. You wouldn’t want your GP doing surgery. Working with a specialist estate planning practice ensures that your plan is tailored to your specific circumstances and takes advantage of every available relief and exemption.

We recommend regular reviews of your estate plan — ideally every three to five years, or whenever there is a major life event or change in tax legislation — to ensure it remains fit for purpose. Plan, don’t panic.

Conclusion

As we have explored the complexities of inheritance tax in the UK, US, Canada, and Europe, one thing is abundantly clear: the UK system is one of the harshest for ordinary homeowners among developed nations. While the US shelters estates of up to $13 million, and Canada has no inheritance tax at all, UK families face a 40% charge on everything above a nil rate band that has been frozen at £325,000 since 2009.

Regional Variations and Implications

The UK’s centralised IHT system contrasts sharply with the US federal/state approach and Canada’s capital-gains-based model. European countries offer a mixed picture, but many provide significantly more generous exemptions for close family members than the UK does. The practical result is that a UK family with a home worth £400,000 and modest savings can face a substantial IHT bill, while an equivalent family in the US, Canada, or many European countries would pay little or nothing.

This is not about the super-wealthy — it’s about ordinary families being caught by a threshold that hasn’t moved in over 15 years while property values have continued to climb. Keeping families wealthy strengthens the country as a whole, and understanding these international comparisons helps put the UK’s system in proper context.

Future of Inheritance Tax Legislation

UK inheritance tax is continuing to evolve — and not in taxpayers’ favour. The nil rate band freeze extends until at least April 2031. From April 2026, Business Property Relief and Agricultural Property Relief will be capped. From April 2027, inherited pensions will be brought into the IHT net for the first time. These changes mean that effective estate planning has never been more important.

By staying informed about the inheritance tax comparison between major economies and understanding the specific rules of the UK inheritance tax system, you can take practical steps to protect your family’s wealth. Whether that means using lifetime gifts, setting up a discretionary trust, or simply reviewing your will, the time to plan is now — not when it’s too late.