Inheritance Tax and Wills UK 2026

UK adults with an estate approaching the inheritance tax thresholds need to understand how a will interacts with the tax. This guide explains inheritance tax and wills in England and Wales: the nil-rate bands, the spouse and charity exemptions, how allowances transfer, and the role of gifts. It cites HMRC and legislation.gov.uk. Kael Tripton is an editorial publisher and not a regulated legal services provider. This article is information only and is not legal advice. Tax planning is complex and case-specific, so anyone with a taxable estate should consult an SRA-authorised solicitor, a tax adviser, or Citizens Advice.

How inheritance tax works

Inheritance tax is a tax on the estate of someone who has died, and in some cases on gifts made during their lifetime. The basic structure is set by the Inheritance Tax Act 1984 (legislation.gov.uk). Every estate has a tax-free threshold called the nil-rate band, currently £325,000, and inheritance tax is charged at 40 percent on the value of the estate above the available threshold (HMRC, gov.uk, accessed June 2026). Many estates pay no inheritance tax at all, because they fall below the threshold or qualify for exemptions.

On top of the standard nil-rate band, a residence nil-rate band of up to £175,000 is available where a person leaves their home, or a share of it, to direct descendants such as children or grandchildren (HMRC, gov.uk, accessed June 2026). The residence nil-rate band is reduced where the estate is worth more than £2 million. Together, the two bands mean a person can potentially pass on up to £500,000 free of inheritance tax, and a married couple or civil partners can combine their allowances to pass on up to £1 million, subject to the conditions being met.

How a will affects the tax

A will does not change the inheritance tax rules, but how it is written can affect how much tax an estate pays. The most significant exemption is the spouse exemption: gifts to a spouse or civil partner are generally free of inheritance tax, whatever their value (HMRC, gov.uk, accessed June 2026). A will that leaves everything to a surviving spouse usually means no inheritance tax is due on the first death, with the allowances preserved for later.

A will can also direct gifts to charity, which carry two tax advantages. Gifts to charity are themselves exempt, and where a person leaves at least 10 percent of their net estate to charity, the rate of inheritance tax on the rest of the estate falls from 40 percent to 36 percent (HMRC, gov.uk, accessed June 2026). The way a will allocates assets between exempt and non-exempt beneficiaries, and whether it uses the nil-rate band efficiently, can therefore change the tax outcome. This is why estates near the thresholds often benefit from professional drafting.

Transferring allowances between spouses

One of the most valuable features for married couples and civil partners is the ability to transfer unused allowances. When the first partner dies and leaves everything to the survivor, the spouse exemption usually means no inheritance tax is due, and the first partner's unused nil-rate band can be transferred to the survivor (HMRC, gov.uk, accessed June 2026). The same applies to the residence nil-rate band.

This is what allows a surviving spouse or civil partner to have a combined threshold of up to £1 million on the second death, where both the standard and residence nil-rate bands are available and a home passes to direct descendants. The transfer is not automatic in the sense of being applied without action: the personal representatives must claim it when dealing with the second estate, using the relevant HMRC forms (HMRC, gov.uk, accessed June 2026). Keeping records of the first death helps the survivor's executors make the claim correctly.

Lifetime gifts and the seven-year rule

Inheritance tax can also apply to gifts made during a person's lifetime, which interacts with what is left in the will. Most gifts to individuals are potentially exempt transfers, meaning they fall outside the estate for inheritance tax if the person survives for seven years after making the gift (HMRC, gov.uk, accessed June 2026). If the person dies within seven years, the gift is brought back into account, although taper relief can reduce the tax on gifts made between three and seven years before death where they exceed the nil-rate band.

There are also several smaller exemptions for lifetime giving, including an annual exemption of £3,000, small gifts of up to £250 per person, and gifts in consideration of marriage (HMRC, gov.uk, accessed June 2026). Lifetime gifts reduce the estate that the will deals with, so they form part of the wider planning picture. Records of gifts matter, because the personal representatives need them to complete the inheritance tax account accurately after death.

How this connects to wills and probate

Inheritance tax sits at the meeting point of a will and probate. The will determines who inherits and can be structured to use exemptions and allowances, while the tax itself is calculated and paid as part of the probate process. The companion guide to inheritance tax and probate explains how the tax is reported to HMRC and paid before a grant is issued.

The tax position also shapes choices elsewhere in the cluster. For couples, the way mirror wills are drafted can affect how allowances are used and transferred. Where there is no will, the intestacy rules determine who inherits, which may not make full use of the spouse exemption or the nil-rate bands. Writing a will with the tax in mind is the way to keep control of both who inherits and how much tax the estate pays.

When to use a solicitor versus doing it yourself

For an estate comfortably below the nil-rate band, the inheritance tax position is usually straightforward, and a simple will may not need specialist tax advice (HMRC, gov.uk, accessed June 2026). Money Helper provides general guidance on the thresholds and exemptions (moneyhelper.org.uk, accessed June 2026).

Professional advice becomes more valuable as the estate approaches or exceeds the thresholds, or where it includes a business, agricultural property, trusts, or assets abroad. A solicitor or tax adviser can structure the will to use exemptions and allowances efficiently, advise on lifetime gifts, and ensure the residence nil-rate band conditions are met. The Law Society and the Solicitors Regulation Authority maintain registers of authorised solicitors (lawsociety.org.uk and sra.org.uk, accessed June 2026). Because inheritance tax planning is complex and the rules change, case-specific advice is generally worthwhile for any estate likely to be taxable.

FAQ: inheritance tax and wills

What is the inheritance tax threshold in 2026?

The nil-rate band is £325,000, and a residence nil-rate band of up to £175,000 is available where a home passes to direct descendants (HMRC, gov.uk, accessed June 2026). Together these can allow up to £500,000 to pass free of inheritance tax, and a married couple or civil partners can combine allowances for up to £1 million, subject to the conditions.

Do I pay inheritance tax on what I leave my spouse?

Generally no. Gifts to a spouse or civil partner are usually exempt from inheritance tax, whatever their value (HMRC, gov.uk, accessed June 2026). A will leaving everything to a surviving spouse usually means no inheritance tax on the first death. The first partner's unused nil-rate band and residence nil-rate band can also transfer to the survivor for use on the second death.

Can leaving money to charity reduce inheritance tax?

Yes. Gifts to charity in a will are exempt from inheritance tax, and where at least 10 percent of the net estate is left to charity, the rate of inheritance tax on the rest falls from 40 percent to 36 percent (HMRC, gov.uk, accessed June 2026). This can benefit both the charity and the other beneficiaries, depending on how the estate is structured.

What is the seven-year rule on gifts?

Most gifts to individuals are potentially exempt transfers and fall outside the estate for inheritance tax if the person survives seven years after the gift (HMRC, gov.uk, accessed June 2026). If they die within seven years, the gift is brought back into account, though taper relief can reduce the tax on gifts made between three and seven years before death where they exceed the nil-rate band.

How is the residence nil-rate band claimed?

The residence nil-rate band applies where a home, or a share of it, passes to direct descendants such as children or grandchildren, and is worth up to £175,000 (HMRC, gov.uk, accessed June 2026). It is reduced for estates over £2 million. Any transfer of an unused residence nil-rate band from a deceased spouse must be claimed by the personal representatives using HMRC forms.