Key facts (2026): The standard inheritance tax nil rate band is £325,000 per person in 2026 — frozen at this level until at least 2028. The residence nil rate band adds a further £175,000 when a main home is left to direct descendants, giving a potential threshold of £500,000 per person and £1,000,000 for married couples.
Inheritance tax (IHT) is charged at 40% on the value of an estate above the threshold. Despite being described as a tax on the wealthy, rising property values mean an increasing number of ordinary UK households now face IHT liability. Understanding the thresholds and available reliefs is essential for effective estate planning.
The Nil Rate Band (NRB)
Every person has a nil rate band of £325,000 — the amount that can be passed on free of inheritance tax. This threshold has been frozen since 2009 and will remain so until at least 2028. On death, the estate pays 40% IHT on everything above this threshold. Married couples and civil partners can transfer any unused NRB to the surviving spouse, potentially doubling the combined threshold to £650,000.
The Residence Nil Rate Band (RNRB)
An additional allowance of £175,000 applies when a main residence is passed to direct descendants — children, grandchildren, or step-children. Like the NRB, this is transferable between spouses, giving a combined potential threshold of £1,000,000. The RNRB tapers away for estates worth over £2,000,000, reducing by £1 for every £2 above this level.
IHT Rate and Reduced Rate
The standard IHT rate is 40% on the taxable estate above the threshold. A reduced rate of 36% applies if at least 10% of the net estate is left to charity. Gifts made during lifetime are also subject to IHT rules — most lifetime gifts become exempt if the donor survives 7 years after making them.
Our Verdict
IHT is one of the most planning-responsive taxes in the UK — the reliefs and exemptions are significant but require forward planning. The combination of the NRB and RNRB means many estates under £500,000 (or £1,000,000 for couples) pay no IHT at all. For larger estates, lifetime gifting, trusts, and business relief can substantially reduce the bill. Take advice early — IHT planning done in the last few months of life has limited effectiveness.
Frequently Asked Questions
What is the inheritance tax threshold UK 2026?
£325,000 nil rate band per person. With the residence nil rate band of £175,000 this rises to £500,000 for those leaving a home to direct descendants.
Do spouses pay inheritance tax UK?
Transfers between UK-domiciled spouses and civil partners are completely exempt from IHT, regardless of amount.
What is the 7-year rule for IHT?
Gifts made more than 7 years before death are exempt from IHT. Gifts made within 7 years are potentially chargeable on a sliding taper scale.
Disclaimer: This article is for informational purposes only. Always verify with official sources such as gov.uk or qualified professionals before making decisions.
Last updated: April 2026 · Author: Chandraketu Tripathi
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