How the UK rate actually applies
The 40% headline rate applies only to the part of an estate above the available thresholds, which is why the average effective rate is far lower. Each person has a nil-rate band of £325,000, plus a residence nil-rate band of up to £175,000 where a home passes to direct descendants, and transfers between spouses or civil partners are generally exempt (gov.uk, as at July 2026, subject to change). Unused bands can pass to a surviving partner.
A worked illustration (general example only). An estate of £700,000 left by a single person, with a home passing to their children, may have a nil-rate band of £325,000 and a residence nil-rate band of up to £175,000, so up to £500,000 could fall within the tax-free thresholds. Tax at 40% would then apply to the remaining £200,000, giving around £80,000 of inheritance tax and an effective rate on the whole estate of roughly 11% (
based on gov.uk thresholds and rates, as at July 2026, subject to change). Every estate is different, the residence band tapers above £2,000,000, and reliefs may change the result, so this is general information rather than a calculation for any individual.
This gap between the headline rate and the effective rate matters when comparing countries. A system with a high top rate but generous allowances for close family can produce a lighter real burden than a system with a lower headline rate and little exemption. Comparing the 40% UK figure directly with a 55% top rate elsewhere can therefore mislead unless the thresholds and family exemptions are read alongside it.
What the numbers mean
In our view the most useful takeaway is that headline inheritance tax rates by country are a starting point, not a verdict. Whether a family pays anything at all, and how much, depends far more on thresholds, on the relationship between the deceased and the heir, and on available reliefs than on the top rate alone. The UK data shows why: a 40% headline rate coexists with a 13% average effective rate and a charge on fewer than 5% of deaths (gov.uk for the 40% rate; HMRC, published 31 July 2025 for the 13% average effective rate and the 4.62% of deaths from which the fewer-than-5% figure derives, all as at July 2026, subject to change).
Three points stand out from the verified figures. First, most systems raise little revenue from these taxes, on average around 0.5% of total tax revenues across OECD countries that levy them (OECD, 2021, subject to change), and UK inheritance tax is forecast at about 0.7% of all receipts in 2025 to 2026 (OBR, November 2025, subject to change). Second, several countries, including Austria, Estonia and Norway, levy no such tax at all (Tax Foundation, 2023 data, subject to change), so the presence of a tax is itself a policy choice that can change over time. Third, because the UK freezes its thresholds while asset values tend to rise, the share of estates affected can grow even when the rate does not, which is one reason many people choose to review their arrangements periodically.
A headline rate tells you the ceiling. Thresholds, family exemptions and reliefs tell you what most families actually pay.
None of this is a reason to assume any particular outcome. Cross-border estates can be taxed in more than one country, double taxation relief and treaties may apply, and the interaction of two systems is rarely intuitive. Where an estate touches more than one country, it can be worth discussing the position with a suitably qualified professional in each jurisdiction before making decisions.
Inheritance tax in Scotland and Northern Ireland
Inheritance tax is a UK-wide tax, so the same rates and thresholds apply in England, Wales, Scotland and Northern Ireland (gov.uk, as at July 2026, subject to change). What differs is succession law. Scotland has its own rules, including legal rights that can entitle a spouse and children to a fixed share of certain assets, and it uses confirmation rather than a grant of probate. Northern Ireland broadly follows the England and Wales approach. Cross-border and international estates can raise added complexity, and advice in each relevant jurisdiction is often sensible.
Sources and methodology
Every figure on this page is drawn from a named source and dated at its point of use. UK rates, thresholds and reliefs come from official government pages; UK statistics come from HMRC and the OBR; international rate ranges come from clearly attributed comparative research, which itself draws on professional tax guides. Rates and rules change, and international figures in particular can move between annual updates, so each should be checked against the source before it is relied on.
- UK rates and thresholds: gov.uk/inheritance-tax and gov.uk rates and allowances (as at July 2026).
- Frozen thresholds: gov.uk nil-rate band publication (as at July 2026).
- UK statistics (taxpaying estates, share of deaths, liabilities, effective rate): HMRC Inheritance Tax liabilities statistics, commentary, tax year 2022 to 2023, published 31 July 2025.
- UK forecast and share of receipts: Office for Budget Responsibility, inheritance tax, November 2025 forecast.
- International rate ranges (Europe): Tax Foundation, Estate, Inheritance, and Gift Taxes in Europe, 2023 data published 2024, drawing on EY and PwC guides.
- OECD context (top rates, revenue share): OECD, Inheritance Taxation in OECD Countries, 2021.
Frequently asked questions
Which country has the highest inheritance tax rate?
Among OECD countries, Japan applies the highest top statutory inheritance tax rate at 55%, with South Korea next at 50% (OECD, 2021, subject to change). In Europe, some systems reach higher top rates for distant or unrelated heirs, such as Spain and Belgium. These are ceilings rather than the rate most families pay, since thresholds and family exemptions can reduce the bill considerably.
How does the UK inheritance tax rate compare internationally?
The UK standard rate of 40% (gov.uk, as at July 2026, subject to change) is higher than the entry rate in many countries but below the top rates in parts of Europe and in Japan and South Korea. Direct comparison can mislead, because the UK charges the rate only above its thresholds, so the effective rate most estates pay is far lower than the headline figure.
What is the average inheritance tax actually paid in the UK?
In tax year 2022 to 2023, UK taxpaying estates paid an average effective tax rate of 13%, well below the 40% headline rate, and only about 4.62% of deaths resulted in a charge (HMRC, published 31 July 2025, subject to change). The effective rate varies with estate size and the reliefs claimed, so an individual estate can pay more or less than the average.
Do all countries charge inheritance tax?
No. Across 35 European countries covered in one survey, 24 levy an estate, inheritance or gift tax and the rest do not, with Austria, Estonia and Norway among those with no such tax (Tax Foundation, 2023 data, subject to change). Whether a country levies the tax is a policy choice that can change, so current rules should be checked for any specific country.
Could I be taxed twice on an international estate?
It is possible where an estate or an heir has connections to more than one country, because two systems can both claim to tax the same assets. The UK has double taxation relief and agreements with some countries that can reduce or offset this (gov.uk, as at July 2026, subject to change). Cross-border positions are complex, so many people choose to take advice in each relevant jurisdiction.
Why does the UK tax so few estates if the rate is high?
Because the 40% rate applies only above the tax-free thresholds, and transfers between spouses and civil partners are generally exempt. With a nil-rate band of £325,000 per person and a residence band of up to £175,000 (gov.uk, as at July 2026, subject to change), many estates fall below the thresholds, which is why fewer than 5% of deaths lead to a charge.
For the wider picture, see our estate planning guide and the pillar on Inheritance Tax Explained, which set out how thresholds, reliefs and lifetime gifts fit together. For the mechanics of the UK charge, our overview of inheritance tax explained covers the allowances referenced above.
About Fairchild Oldfield
The Fairchild Oldfield team brings together estate planning, tax, independent financial advice and client care, working with families across England and Wales.
Fairchild Oldfield are estate planning specialists and will writers, not a firm of solicitors. This article is general information based on practical experience, not legal, tax or financial advice.
Important: This article is general information only and is not legal, tax or financial advice. Reading it does not create a professional relationship. UK rates and rules are based on the law of England and Wales; inheritance tax applies across the UK, but succession law and other UK nations may differ, and international figures are illustrative and country-specific. Figures are current as at the dates shown, are subject to change, and international data may lag. Before acting, many people choose to seek advice from a suitably qualified professional, such as a solicitor, a STEP practitioner, an accountant, or an FCA-authorised financial adviser, who can consider your individual circumstances.
