Scotland has no inheritance tax of its own. The same tax applies across the UK, run by HMRC. Scottish law about who gets what sits alongside it, and the two interact more than most people expect.
The allowances
| Allowance | Amount | Notes |
|---|---|---|
| Nil-rate band | £325,000 | Unchanged since 2009. Frozen until April 2031 |
| Residence nil-rate band | Up to £175,000 | Applies when your home passes to children or grandchildren. Reduces by £1 for every £2 the estate is worth over £2 million |
| Spouse or civil partner | No limit | Anything left to a spouse or civil partner is exempt |
| Rate above the allowances | 40% | 36% if you leave at least 10% of your net estate to charity |
Any part of the nil-rate band or residence nil-rate band that a spouse didn't use passes to the survivor. A couple who use both in full can pass on £1 million between them with no tax.
Two examples
A single person dies with an estate of £700,000, including a home worth £350,000 that goes to their daughter. The nil-rate band and residence nil-rate band together give £500,000. That leaves £200,000 taxable at 40%, a bill of £80,000.
A widow dies with the same £700,000, and her late husband left everything to her, using none of his allowances. Hers and his combine to £1 million, so there is no tax to pay.
The difference is whether the first death used up the allowances. Planning around that is routine, and it is a question for your will.
Where Scots law fits in
Inheritance tax tells you how much goes to HMRC. Scots law tells you who gets the rest. A spouse's prior rights and legal rights come out of the estate before the free estate is divided, and legal rights are calculated on the moveable estate after inheritance tax has been deducted. Our guides to dying without a will and legal rights set out how those work.
Timing also differs from England. In Scotland the executor applies for confirmation, not probate. Some inheritance tax has to be paid before the sheriff court issues it. That is a cash-flow problem if the estate is mostly a house, and executors should plan for it early.
What counts toward the total
Your estate includes the house, savings, investments, vehicles and possessions, and the proceeds of any life insurance not written in trust. Our guide to life insurance in trust shows how to keep a policy outside the estate.
Two changes add more to the pile. From April 2027, unused pension funds count. And from April 2026 farms and family businesses lose their unlimited relief above £2.5 million.
Ways estates reduce the bill
Gifts made during your lifetime can fall outside the estate. The rules are in our guide to gifts and the seven-year rule. Trusts, charitable giving and insurance are the other main tools. All of them have conditions.
Richard arranges inheritance tax planning with your accountant and our specialist legal partners. See our Inheritance Tax page.