The Inheritance Tax threshold
The nil-rate band is £325,000 per person. A residence nil-rate band of up to £175,000 can be added where a home passes to direct descendants, and a late spouse's unused allowances can be transferred — so a couple's combined threshold can reach £1,000,000. Anything above the available threshold is taxed at 40%.
Jurisdiction: England & Wales. Last reviewed 13 August 2026.
How the allowances stack
| Allowance | Amount | Condition |
|---|---|---|
| Nil-rate band | £325,000 | Available to every estate |
| Residence nil-rate band | up to £175,000 | Home passing to children or other direct descendants |
| Transferred nil-rate band | up to £325,000 | Unused proportion from a spouse who died first |
| Transferred residence band | up to £175,000 | Unused proportion from a spouse who died first |
Spouse and charity transfers are exempt
Anything passing to a surviving spouse or civil partner, or to a UK charity, is exempt regardless of value. Many large estates pay no tax on the first death for exactly this reason.The 40% rate applies only to the excess
Tax is charged at 40% on the value above the available threshold, not on the whole estate. The rate falls to 36% where at least 10% of the net estate is left to charity. Figures on this page are for the 2026/27 tax year and were last checked on 1 September 2026.
Watch the taper
The residence nil-rate band is reduced where the estate exceeds the taper threshold, by £1 for every £2 above it. Large estates can therefore lose the residence allowance entirely, which is a common reason a valuation that looks comfortably under the combined figure still produces a tax bill.
Frequently asked questions
- Do I pay Inheritance Tax on money I inherit?
- No. The tax is paid by the estate before distribution, not by beneficiaries on what they receive.
- When must the tax be paid?
- By the end of the sixth month after the month of death. Interest runs from then, and tax on property can be paid in instalments.
- Does the threshold change?
- It is set by the Government and has been frozen for several years. Always check the current figure on GOV.UK before relying on it.
Dealing with a straightforward estate yourself?
Our free probate checker helps you work out whether this estate appears suitable for a self-help route. It asks about jurisdiction, disputes and complexity, takes a few minutes, and needs no account.
£349 one-off service fee if you go ahead. Court fee and any Inheritance Tax are paid separately.
Guides that go deeper
- Claiming a late spouse's unused nil-rate bandHow to transfer an unused nil-rate band from a spouse or civil partner who died earlier, the evidence HMRC wants, and the form to use.
- The residence nil-rate band, including downsizingWho qualifies for the residence nil-rate band, the taper, and how the downsizing addition works when the home was sold or swapped before death.
Sources
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