Inheritance Tax Threshold UK 2026: Allowances, Rates and Exemptions
The inheritance tax nil-rate band for 2026/27 remains at £325,000 per person — frozen since 2009. Add the residence nil-rate band and a couple could pass on up to £1 million tax-free. Here is what you need to know.
The 2026/27 inheritance tax thresholds at a glance
| Band | Rate | Notes |
|---|---|---|
| Up to £325,000 (nil-rate band) | 0% | No tax on this portion |
| £325,001–£500,000 (with RNRB) | 0% if home left to children | RNRB worth up to £175,000 |
| Above threshold | 40% | 36% if 10%+ left to charity |
The nil-rate band (NRB): £325,000 per person
Every person domiciled in the UK has a nil-rate band (NRB) of £325,000 for 2026/27. This means the first £325,000 of an estate passes completely free of inheritance tax. The NRB has been frozen at this level since 2009 and the government has confirmed it will remain frozen until at least April 2030. With house prices rising, this freeze is pulling more estates into the IHT net.
Married couples and civil partners can transfer any unused NRB to the surviving spouse. If the first to die left their entire estate to their spouse (which is exempt from IHT in any case), the surviving spouse can use up to two NRBs — a potential combined threshold of £650,000.
The residence nil-rate band (RNRB): up to £175,000 per person
On top of the NRB, an additional residence nil-rate band (RNRB) of up to £175,000 is available when:
- The deceased owned a main residential property (or had downsized after July 2015), and
- That property (or equivalent assets) passes to a direct descendant — children, grandchildren, stepchildren, or adopted children
The RNRB tapers by £1 for every £2 the estate exceeds £2 million, disappearing entirely at £2.35 million. Like the NRB, unused RNRB transfers to a surviving spouse or civil partner.
For a married couple where both have their full allowances available and are leaving the family home to their children, the combined threshold is:
The spouse exemption — unlimited
Transfers between spouses and civil partners are completely exempt from inheritance tax — there is no limit. This means you can leave your entire estate to your spouse without any IHT liability, regardless of size. The IHT issue only arises on the second death, when the combined estate passes to children or other beneficiaries.
Key exemptions and reliefs
- Spouse/civil partner exemption: unlimited, as above
- Charity exemption: gifts to qualifying UK charities are IHT-free. Leaving 10%+ of the net estate to charity reduces the IHT rate from 40% to 36%
- Annual gift exemption: £3,000 per year can be given away without IHT implications
- Small gifts: any number of gifts up to £250 per recipient per year, to different people
- Gifts from income: regular gifts from surplus income (not capital) are exempt if they do not reduce your standard of living
- Business Property Relief: 50%–100% relief on qualifying business assets held for at least 2 years
- Agricultural Property Relief: 50%–100% relief on agricultural property
- 7-year rule: gifts made more than 7 years before death are fully exempt
Why your will matters for IHT
Inheritance tax is calculated on death — and your will determines how your estate is distributed. A poorly drafted will can waste nil-rate bands, miss charity relief, or fail to maximise the RNRB. A well-drafted will, combined with straightforward lifetime planning, can dramatically reduce or eliminate IHT on a typical family estate.
For estates likely to face IHT, we recommend taking professional advice. For estates comfortably below the threshold, our Single Will Kit or Essentials Bundle is sufficient. Our IHT basics guide covers the key planning points in plain English.
Frequently asked questions
What is the inheritance tax threshold in the UK for 2026/27?
The inheritance tax nil-rate band (NRB) for 2026/27 is £325,000 per person. No inheritance tax is charged on the first £325,000 of a person's estate. The NRB has been frozen at this level since 2009 and is confirmed frozen until at least April 2030. On top of the NRB, a residence nil-rate band (RNRB) of up to £175,000 is available if you leave your main home to a direct descendant.
What is the inheritance tax rate in the UK?
Inheritance tax is charged at 40% on the portion of an estate above the nil-rate band (after reliefs and exemptions). The rate is reduced to 36% if at least 10% of the net estate is left to a qualifying charity. There is no inheritance tax between spouses or civil partners, regardless of the size of the estate — the spouse exemption is unlimited.
Can I inherit £500,000 without paying inheritance tax?
Potentially yes. A married couple or civil partners can combine their nil-rate bands: £325,000 each = £650,000. If they also have a main home to leave to their children, they can add the residence nil-rate band: £175,000 each = £350,000. Together, the combined threshold for a couple leaving their home to children is up to £1,000,000.
What is the residence nil-rate band?
The residence nil-rate band (RNRB) is an additional IHT allowance of up to £175,000 per person (2026/27), available when a main residential property (or downsized proceeds) is left to a direct descendant — children, grandchildren, stepchildren, adopted children. It tapers by £1 for every £2 the estate exceeds £2 million. Unused RNRB can be transferred to a surviving spouse.
Do I pay inheritance tax on a gift?
Gifts made more than 7 years before death are fully exempt from IHT. Gifts within 7 years of death may be subject to IHT on a sliding scale (taper relief). Annual exemptions allow you to give away up to £3,000 per year without IHT implications, plus any number of small gifts up to £250 per recipient. Gifts from normal income that do not reduce your standard of living are also exempt.
Does a will help reduce inheritance tax?
A will is essential to IHT planning because it determines how your estate is structured on death. Leaving assets to a spouse or civil partner is IHT-free. Leaving assets to charity reduces the rate to 36%. Structuring the distribution to maximise use of nil-rate bands and reliefs (Business Property Relief, Agricultural Property Relief) requires careful will drafting. For significant estates, speak to a solicitor or financial planner about IHT-efficient will structures.
Write your will today
A well-drafted will is the foundation of any IHT plan. Our Essentials Bundle (£89.99) includes the will template, LPA guidance, Letter of Wishes, Funeral Wishes Planner, Digital Legacy Inventory, and Executor Guide.