Quick Summary
- Each person has a £325,000 nil-rate band, plus up to £175,000 if their home passes to children or grandchildren.
- Anything left to a spouse or civil partner is normally exempt, and unused allowances transfer.
- A married couple can pass on up to £1 million tax-free.
- Tax is 40% above the allowances (36% if 10% or more goes to charity).
- From 6 April 2027, most unused pension funds will count towards the estate.
Inheritance tax (IHT) is a UK-wide tax, so the same allowances apply in Scotland as in England. But Scottish succession law and the confirmation process work differently. With allowances frozen and pensions being brought into IHT from 2027, more Scottish families need to plan ahead.
The allowances
| Allowance | Amount |
|---|---|
| Nil-rate band | £325,000 per person |
| Residence nil-rate band | Up to £175,000, if your home passes to direct descendants |
| Maximum per person | £500,000 |
| Maximum for a married couple or civil partners | £1,000,000 |
These allowances are frozen. The residence nil-rate band is reduced by £1 for every £2 by which the estate exceeds £2 million.
Spouses and civil partners
Anything left to a spouse or civil partner is normally exempt. Any allowance the first partner doesn't use passes to the survivor — which is how a couple can leave up to £1 million tax-free. Unmarried partners don't get this exemption, however long they've lived together.
Lifetime gifts and the 7-year rule
Gifts to individuals are usually free of IHT if you live for 7 years after making them. If you die within 7 years, the gift uses up your nil-rate band first, and tapering reduces the tax on the gift if you die 3 to 7 years after it. Some gifts are immediately exempt:
- £3,000 a year annual exemption (unused amounts carry forward one year)
- Small gifts of up to £250 per person per year
- Wedding or civil partnership gifts: £5,000 from a parent, £2,500 from a grandparent, £1,000 from anyone else
- Regular gifts from surplus income that don't reduce your standard of living — keep careful records
The pension change from April 2027
Pensions have traditionally sat outside your estate for IHT. From 6 April 2027, most unused pension funds and death benefits will be included in the value of the estate. For many people with large pension pots, this changes the best order to draw on savings, ISAs and pensions in retirement. Now is the time to review your plans.
How Scotland is different
- Executors apply for confirmation from the Sheriff Court, rather than probate.
- Under Scots law, a surviving spouse and children have legal rights to part of the moveable estate, whatever the will says.
- The IHT rules and allowances themselves are the same as elsewhere in the UK.
Paying the tax
IHT is usually due by the end of the sixth month after the month of death, and interest is charged after that. Tax on property can often be paid in instalments over 10 years. Executors must also report the estate's value. Smaller "excepted estates" where no tax is due only need to give basic details when applying for confirmation; larger estates need a full inheritance tax account.
Getting advice
We can value an estate, prepare IHT forms for executors and work with your solicitor or financial adviser on planning. For wills and legal rights, always speak to a Scottish solicitor.
Frequently Asked Questions
What is the inheritance tax threshold in Scotland?
The same as the rest of the UK: a £325,000 nil-rate band per person, plus up to £175,000 residence nil-rate band if your home passes to children or grandchildren.
How much can a married couple leave tax-free?
Up to £1 million, because each partner has up to £500,000 of allowances and any unused allowances pass to the surviving spouse or civil partner.
What is the 7-year rule for inheritance tax?
Gifts to individuals are usually free of IHT if the giver lives for 7 years afterwards. If they die within 7 years, the gift may be taxed, with tapering if death is 3 to 7 years after the gift.
Will my pension be subject to inheritance tax?
From 6 April 2027, most unused pension funds and death benefits will be included in the value of your estate for inheritance tax.
When does inheritance tax have to be paid?
Usually by the end of the sixth month after the month of death. Tax on property can often be paid in instalments over 10 years.
Dealing With an Estate or Planning Ahead?
We help executors with inheritance tax forms and work with your solicitor to plan for the 2027 pension changes.
Sardar Muhammad, AAT
Sardar is the founder of LimeTree Accounting Solutions, an AAT-accredited practice in Govanhill, Glasgow. He works with sole traders, tradespeople, landlords and small limited companies across Glasgow and Clydebank.
This guide is general information based on UK and Scottish tax rules as at 13 October 2026. It is not personal advice. Rates and thresholds change, so speak to us about your own situation.