UK Inheritance Tax Nil Rate Band 2026-27: £325,000 Frozen Until April 2030
TL;DR:
2026-27 IHT Bands at a Glance
| Band | 2026-27 amount | Frozen until | Conditions |
|---|---|---|---|
| Nil-Rate Band (NRB) | £325,000 | April 2030 | All estates |
| Residence Nil-Rate Band (RNRB) | £175,000 | April 2030 | Family home passed to direct descendants |
| Transferable NRB (spouses) | Up to £325,000 | April 2030 | Unused on first death, claimable on second |
| Transferable RNRB (spouses) | Up to £175,000 | April 2030 | Unused on first death, claimable on second |
| Standard IHT rate | 40% | n/a | On estate above bands |
| Reduced IHT rate | 36% | n/a | Estates leaving 10%+ to charity |
Bands and rates verified via gov.uk Inheritance Tax thresholds and rates, May 2026, and HMRC IHT Manual section IHTM31000.
How the £1,000,000 Couple Allowance Works
Married couples and civil partners can combine bands as follows: each spouse has £325,000 NRB plus £175,000 RNRB = £500,000. When the first spouse dies and leaves their estate to the surviving spouse (spousal exemption applies), no IHT is due. The unused NRB and RNRB transfer to the surviving spouse. On the second death, the survivor's executors can claim £325,000 + £325,000 (transferred) + £175,000 + £175,000 (transferred) = £1,000,000.
The RNRB requires the family home (or proceeds of downsizing) to be passed to direct descendants: children, grandchildren, step-children, foster children. It tapers by £1 for every £2 the estate exceeds £2,000,000, and is fully withdrawn at estate values of £2,350,000 (single) or £2,700,000 (couple combined).
Frozen Allowances and Fiscal Drag
The NRB has not risen since April 2009 (£325,000). Cumulative UK inflation from April 2009 to April 2026 is approximately 56% (ONS CPI). If the NRB had tracked CPI, it would now be approximately £507,000. The freeze plus rising property and asset values means more estates pay IHT each year.
HMRC reported IHT receipts of £8.2 billion for 2024-25 (HMRC IHT Statistics, July 2025), the highest on record. Approximately 4.4% of UK deaths now result in an IHT-paying estate, up from 2.7% a decade ago. The OBR projects IHT receipts of £9.7 billion for 2026-27 (Economic and Fiscal Outlook, March 2026).
Common IHT Mitigation Strategies (Legitimate, HMRC-Compliant)
Standard tools used by UK estate planners include: lifetime gifts using the £3,000 annual exemption; gifts out of normal income (must be regular, from income, not affect lifestyle); the 7-year potentially exempt transfer (PET) rule on larger gifts; Business Relief (50% or 100% on qualifying business assets); Agricultural Property Relief; and life insurance written in trust to cover anticipated IHT liability.
Pension funds are typically excluded from estate value for IHT purposes (pre-2027 rules). Note: the Autumn 2024 Budget announced that from 6 April 2027, unused pension funds will be brought into IHT scope. Estate planning involving pensions should account for this change.
FAQ: UK IHT Nil Rate Band 2026
How much can I leave to my children without paying inheritance tax?
A single person leaving the family home to direct descendants can pass on £500,000 (£325,000 NRB + £175,000 RNRB). A married couple combining transferred allowances can pass on £1,000,000 in total. Above these thresholds the standard IHT rate of 40% applies.
Will the nil rate band increase before 2030?
The Autumn 2024 Budget extended the NRB and RNRB freeze to April 2030. Earlier increases would require a fiscal event change. No commitment to raise either band has been made for the period to 2030.
How is the IHT charged on estates above the nil rate band?
The standard rate is 40% on the value of the estate above the available bands. If the deceased leaves at least 10% of the net estate to qualifying charities, the rate on the remaining taxable estate reduces to 36%. Lifetime gifts within 7 years of death may be subject to taper relief, reducing the IHT payable on those specific gifts.
Last reviewed: May 2026. Bands and rules verified via gov.uk inheritance tax thresholds page, HMRC IHT Manual, OBR Economic and Fiscal Outlook March 2026, and HMRC IHT Statistics July 2025 release.
