IHT Threshold UK 2026: Inheritance Tax Thresholds, Nil Rate Band, and RNRB for 2026/27
The inheritance tax nil rate band is £325,000 per person in 2026/27 — frozen to April 2030. With the Residence Nil Rate Band, a single person can have £500,000 exempt, and a married couple up to £1,000,000. IHT is charged at 40% on the excess.
2026/27 IHT Thresholds at a Glance
| Allowance | Amount |
|---|---|
| Nil Rate Band (NRB) | £325,000 |
| Residence Nil Rate Band (RNRB) | £175,000 |
| Transferable NRB (TNRB) | Up to £325,000 |
| Transferable RNRB (TRNRB) | Up to £175,000 |
| Single person: max exempt | £500,000 |
| Married couple: max exempt | £1,000,000 |
| IHT rate above threshold | 40% |
| Charitable reduced rate | 36% |
| RNRB taper starts at | £2,000,000 |
| RNRB fully withdrawn at | £2,350,000 |
| APR/BPR 100% cap (from April 2026) | £1,000,000 |
IHT Thresholds Explained
The nil rate band (NRB): £325,000 per person, frozen to 2030
The nil rate band is the amount of an individual's estate (or chargeable transfers) that is exempt from IHT at the zero rate. In 2026/27, the NRB is £325,000. The NRB has been frozen at this level since 6 April 2009 — a freeze now confirmed to continue until at least 5 April 2030. In real terms, the threshold has fallen by approximately 35% since 2009 due to inflation, pulling hundreds of thousands more estates into IHT. The NRB applies to the death estate plus failed PETs and CLTs in the 7 years before death. Any NRB not used at the first death of a married couple or civil partner is transferred to the surviving spouse under the transferable NRB rules (s8A IHTA 1984), giving the survivor a combined NRB of up to £650,000. Annual exemptions (£3,000) and other lifetime exemptions reduce what counts toward the NRB threshold.
The Residence Nil Rate Band (RNRB): up to £175,000 per person
The RNRB (also called the 'main residence nil rate band') was phased in from 2017 and reached its current level of £175,000 in April 2020, where it has been frozen. It applies only when a main residential property (or downsized equivalent) is 'closely inherited' by direct descendants — biological or adopted children, grandchildren, or their spouses/civil partners. It does not apply to properties left to siblings, nieces/nephews, friends, or cohabiting partners. Where the RNRB is not used on first death (e.g. the home passes to the surviving spouse), the unused RNRB can be transferred to the surviving spouse (Transferred RNRB, s8G IHTA 1984). This gives a surviving spouse with both RNRBs available up to £350,000 of additional threshold on the second death. The RNRB tapers by £1 for every £2 by which the net estate exceeds £2,000,000, reducing to nil where the estate exceeds £2,350,000 (single) or £2,700,000 (surviving spouse with both RNRBs).
The £1 million couples threshold: how it works in practice
A married couple or civil partners can, in the right circumstances, pass up to £1,000,000 free of IHT to their children — without any lifetime giving. This comprises: first person's NRB (£325,000) + first person's RNRB (£175,000) + transferred NRB (£325,000) + transferred RNRB (£175,000) = £1,000,000. Conditions: (1) Both NRBs must be unused (neither partner used their NRB against a CLT or large PET in the prior 7 years); (2) The main residence must pass to direct descendants (children, grandchildren); (3) The estate must not exceed £2,000,000 (otherwise RNRB taper reduces the available threshold). Most moderate-estate married couples with children who own a home will fall within this £1 million threshold. For larger estates, IHT will be charged at 40% on the excess.
The IHT rate: 40% (or 36% for charitable estates)
IHT is charged at 40% on the chargeable estate above the available nil rate band. A single chargeable rate (no progressive bands) has applied since the Finance Act 1988. For estates where at least 10% of the net estate (above the NRB) is left to qualifying charities, the rate is reduced to 36% under Schedule 1A IHTA 1984 (introduced by Finance Act 2012). In some cases, increasing a charitable legacy to meet the 10% threshold reduces overall IHT more than the cost of the extra charitable gift — benefiting both the family and the charity. The lifetime rate on CLTs is 20% (half the death rate). A credit is given for lifetime tax paid if a CLT becomes chargeable on death.
April 2026: APR and BPR cap — new threshold to watch
From 6 April 2026, 100% Agricultural Property Relief (APR) and Business Property Relief (BPR) will be capped at £1,000,000 per person (combined). Above this cap, relief reduces to 50% — an effective IHT rate of 20% on the excess. Each spouse has a separate £1,000,000 cap. AIM shares (which currently qualify for 50% BPR) are included in the cap but only at the 50% relief rate — so they do not reduce the £1,000,000 100%-relief cap directly. This change significantly affects farming families, business owners, and AIM portfolio investors with qualifying assets above £1 million. IHT receipts from agricultural estates will rise substantially from April 2026.
April 2027: pensions within the IHT estate
From 6 April 2027, unspent pension funds (including flexi-access drawdown and uncrystallised pension funds) are proposed to be included in the IHT estate for the first time. Currently, pension death benefits are paid outside the estate — no IHT, no probate, directly to nominated beneficiaries. Under the Budget 2024 proposals, the pension fund will be included in the estate and taxed at 40% above the available threshold. This change will push many estates above the nil rate band or RNRB thresholds — particularly those whose current estate is modest but who have large defined contribution pension pots. Planning steps before April 2027: review pension nominations, consider drawdown strategy, and model the combined estate including pension.
Frequently Asked Questions
What is the IHT threshold in 2026?
In 2026/27, the nil rate band (NRB) is £325,000 per person — unchanged since April 2009 and frozen to April 2030. Additionally, the Residence Nil Rate Band (RNRB) provides up to £175,000 per person where a main home is left to direct descendants. A single person can therefore have up to £500,000 exempt from IHT. A married couple (or civil partners) who combine both NRBs and both RNRBs can shelter up to £1,000,000 from IHT when leaving the home to children.
Has the IHT threshold increased for 2026?
No. The NRB has been frozen at £325,000 since April 2009 and is confirmed frozen until at least April 2030. The RNRB has been frozen at £175,000 since April 2020. Neither threshold increased for 2026/27. In real terms, the freeze means the effective IHT-free threshold has declined significantly — pulling more estates into the IHT net each year through house price and inflation increases.
What is the IHT-free threshold for a married couple in 2026?
A married couple or civil partners can shelter up to £1,000,000 from IHT — provided: (1) neither NRB was used against a prior CLT or large PET; (2) both RNRBs are available (the main home must pass to direct descendants); and (3) the estate does not exceed £2,000,000 (RNRB taper then reduces the threshold). The £1,000,000 threshold comprises two NRBs (£325,000 × 2) plus two RNRBs (£175,000 × 2).
At what estate value does the RNRB taper away?
The RNRB tapers by £1 for every £2 of net estate above £2,000,000. For a single person using one RNRB (£175,000), the taper fully removes the RNRB at a net estate of £2,350,000. For a surviving spouse claiming both the transferred and personal RNRB (£350,000 combined), the full amount is extinguished at £2,700,000. The NRB is not subject to a taper — only the RNRB.
What is the IHT rate in 2026?
40% on the taxable estate above the available nil rate band (plus RNRB if applicable). A 36% rate applies where at least 10% of the net estate (above the NRB) is left to qualifying charities under Schedule 1A IHTA 1984. There are no progressive IHT bands — it is a flat rate applied to the entire excess.
Know Your Thresholds — Then Write a Will That Uses Them
The NRB and RNRB are only fully available when your will directs assets correctly. WillSafe will kits for England and Wales guide you through the choices — direct legacies to children, life interest trusts for spouses, and residue direction — to ensure both thresholds are preserved.
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