Inheritance Tax by Estate Size UK (2026/27)
One table, every estate value from £400,000 to £5 million: what a single person and a married couple actually pay, and exactly where the £2 million taper starts to bite. England and Wales, 2026/27 allowances.
How much inheritance tax will my estate pay?
The full table
Figures assume death in 2026/27, no lifetime gifts in the previous 7 years, no reliefs, and for the couple column a surviving spouse with both nil-rate bands and both residence nil-rate bands available. The residence column assumes the home passes to children or grandchildren and is worth at least the available residence allowance.
| Estate value | Single, home to children | Single, no residence band | Married couple (second death) |
|---|---|---|---|
| £400,000 | £0 | £30,000 | £0 |
| £500,000 | £0 | £70,000 | £0 |
| £600,000 | £40,000 | £110,000 | £0 |
| £700,000 | £80,000 | £150,000 | £0 |
| £750,000 | £100,000 | £170,000 | £0 |
| £800,000 | £120,000 | £190,000 | £0 |
| £1 million | £200,000 | £270,000 | £0 |
| £1.5 million | £400,000 | £470,000 | £200,000 |
| £2 million | £600,000 | £670,000 | £400,000 |
| £2.5 million | £870,000 (RNRB nil) | £870,000 | £700,000 |
| £3 million | £1,070,000 (RNRB nil) | £1,070,000 | £940,000 (RNRB nil) |
| £4 million | £1,470,000 (RNRB nil) | £1,470,000 | £1,340,000 (RNRB nil) |
| £5 million | £1,870,000 (RNRB nil) | £1,870,000 | £1,740,000 (RNRB nil) |
Want your own numbers, including pensions from April 2027? Use the free inheritance tax calculator.
How the allowances stack up
Everyone has a £325,000 nil-rate band (frozen to April 2030). Leaving your home to children or grandchildren adds up to £175,000 of residence nil-rate band, taking a single person to £500,000. Anything left to a spouse or civil partner is exempt, and their unused allowances transfer, so the survivor can have £650,000 of nil-rate bands plus £350,000 of residence bands: £1 million in total. Above the available threshold the rate is 40%, or 36% where at least 10% of the net estate goes to charity.
That is why the table has three columns. The same £600,000 estate pays £40,000, £110,000 or nothing depending on who inherits the home and whether a transferable allowance is available. For most families under £1 million the decisive step is simply a will that routes the home to direct descendants: see the complete inheritance tax guide for the mechanics.
The £2 million taper trap
The residence nil-rate band is withdrawn by £1 for every £2 of estate above £2 million (section 8D to 8G IHTA 1984). A single person has none left at £2.35 million; a couple loses the combined £350,000 by £2.7 million. The taper uses the estate value before any reliefs, so business relief and AIM holdings do not protect the residence band.
- £2.5 million, single: residence band nil, threshold £325,000, taxable £2,175,000, IHT £870,000. That is £210,000 more than a £2 million estate pays.
- £2.5 million, couple: £500,000 excess halves the combined residence band by £250,000, leaving £100,000. Threshold £750,000, taxable £1,750,000, IHT £700,000.
- The fix: lifetime gifts that bring the estate back to £2 million restore the full allowance. A couple gifting £500,000 and surviving 7 years cuts the bill from £700,000 to £400,000, a £300,000 saving.
Business, farm and AIM assets from April 2026
From 6 April 2026, 100% agricultural and business property relief is limited to the first £2.5 million of combined qualifying property per person; value above that receives 50% relief (an effective 20% rate). Unused £2.5 million allowance transfers to a surviving spouse or civil partner. A £3 million qualifying farm therefore has £2.5 million fully relieved and £500,000 half relieved, leaving £250,000 in the taxable estate.
AIM shares are different: they get 50% relief only, sit outside the £2.5 million allowance and do not use it up. Example: a single person with a £2.5 million estate including £500,000 of AIM shares held over 2 years deducts £250,000 of relief. Taxable estate £2,500,000 minus £250,000 minus £325,000 equals £1,925,000; IHT £770,000, a £100,000 saving against no relief. The residence band stays nil because the taper looks at the pre-relief estate.
Pensions join the estate in April 2027
From 6 April 2027 most unused defined-contribution pension funds and death benefits are due to count as part of the estate. The table above will effectively shift one row for many families: a £700,000 estate with a £300,000 pension becomes a £1 million estate. Estates already near £2 million can be pushed into the taper, losing residence band on top of the extra 40% charge. If your will predates the Autumn 2024 Budget, this is the single strongest reason to review and update it now.
Frequently asked questions
How much inheritance tax will I pay on a £500,000 estate?
A single person leaving their home to children or grandchildren pays nothing: the £325,000 nil-rate band plus the £175,000 residence nil-rate band exactly covers £500,000. Without the residence band (no home, or the home does not pass to direct descendants) the taxable estate is £175,000 and the bill is £70,000. A married couple on the second death has at least £650,000 of combined nil-rate bands, so a £500,000 estate pays nothing.
How much inheritance tax is due on a £1 million estate?
A married couple or civil partners can pass £1 million tax free on the second death when both nil-rate bands (£650,000 combined) and both residence nil-rate bands (£350,000 combined) are available and the home passes to direct descendants, so the bill is £0. A single person with the full £500,000 threshold pays 40% of £500,000, which is £200,000; without the residence band it rises to £270,000.
What is the £2 million taper and why does it matter?
The residence nil-rate band is withdrawn by £1 for every £2 the net estate exceeds £2 million. A single person loses all £175,000 by £2.35 million; a surviving spouse loses the combined £350,000 by £2.7 million. On a £2.5 million estate a couple keeps only £100,000 of residence band, so the bill is £700,000. Reducing the estate below £2 million through lifetime gifts restores the full allowance, which is why gifts are the most effective tool for estates just over £2 million.
Do business or farm assets change the picture?
Yes. From 6 April 2026, 100% agricultural and business property relief applies to the first £2.5 million of combined qualifying property, with 50% relief above that; any unused £2.5 million allowance is transferable to a surviving spouse or civil partner. AIM shares are treated separately: they receive 50% relief only, sit outside the £2.5 million allowance, and do not use it up. Relief reduces the taxable estate but does not restore a tapered residence nil-rate band, because the taper is based on the estate value before reliefs.
How will the April 2027 pension change affect these figures?
From 6 April 2027 most unused defined-contribution pension funds and death benefits are due to come into the estate for IHT. A £700,000 estate plus a £300,000 pension becomes a £1 million estate, which can push families who currently pay nothing over the threshold. If your will and pension nominations were written before 2024, review them before April 2027.
Can charitable gifts reduce the rate?
Leaving at least 10% of the net estate to charity cuts the IHT rate on the rest from 40% to 36%, and the gift itself is exempt. On larger estates a charitable legacy can also bring the estate back below the £2 million taper threshold and restore the residence nil-rate band, a double saving. For example, a £2.5 million single estate leaving £600,000 to charity is chargeable on £1.9 million, keeps its residence band and pays 36% of £1.4 million, which is £504,000, instead of £870,000 with no gift.
Put the allowances to work
Every allowance in this guide is claimed through your will: the home to direct descendants, the spouse exemption, the charity rate. WillSafe UK templates cover each of these in plain English. This guide is information, not tax or legal advice; estates with business property, farms or assets abroad should take professional advice.
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