The inheritance tax threshold in the UK is £325,000 per person. This is the nil-rate band: the slice of your estate that is taxed at 0% when you die. Only the value above your available threshold is taxed, at 40% as standard, or 36% where 10% or more of the net estate goes to charity. The £325,000 figure has not moved since 2009 and is frozen until 5 April 2031.
For many families the real threshold is higher than £325,000. If you leave your home to children or grandchildren, a residence nil-rate band of up to £175,000 can be added, taking one person's allowances to £500,000. And because unused allowances transfer between spouses and civil partners, a married couple or civil partnership can pass on up to £1,000,000 before any inheritance tax is due. If you want a personal figure rather than the general rule, our free inheritance tax threshold calculator works out your estate's combined allowances, and whether tax is likely, in about two minutes.
This guide covers England and Wales terminology throughout, though inheritance tax itself applies UK wide. The tax rules are the same in Scotland, but Scottish succession law around wills and estates differs, so if that is your situation start with our guide to the inheritance tax threshold in Scotland. Nothing here is personal tax or legal advice.
The thresholds at a glance (2025/26 and 2026/27)
The figures are identical for the 2025/26 and 2026/27 tax years, and will remain so until 5 April 2031.
| Allowance | Amount | Key condition |
|---|---|---|
| Nil-rate band (NRB) | £325,000 per person | Applies to every estate, no conditions |
| Residence nil-rate band (RNRB) | Up to £175,000 per person | Home (or downsizing equivalent) passes to direct descendants; tapered above £2,000,000 |
| Transferable allowances | Up to 100% of both bands | Unused percentage passes to a surviving spouse or civil partner |
| Maximum for a couple | £1,000,000 | Both full NRBs and both full RNRBs available |
| Standard rate above threshold | 40% | On the excess only, not the whole estate |
| Reduced charity rate | 36% | 10% or more of the net estate left to charity |
The nil-rate band: everyone's £325,000
Every estate gets the £325,000 nil-rate band automatically. It does not matter whether there is a will, who inherits, or what the estate contains. HMRC values everything the person owned at death (property, savings, investments, possessions, some gifts made in the previous seven years), deducts debts and funeral costs, and the first £325,000 of what remains is taxed at 0%.[1]
A worked example. An estate worth £400,000, left entirely to a niece, with no home passing to direct descendants: £400,000 minus £325,000 leaves £75,000 taxable. At 40% the bill is £30,000. The common misunderstanding is that the whole £400,000 is taxed once the threshold is crossed. It is not. Only the excess is.
Anything left to a spouse or civil partner, or to charity, is exempt altogether and does not use up the band at all. That spouse exemption is why the first death in a married couple usually produces no inheritance tax, and why the allowances stack up for the second death, which we come to below.
The residence nil-rate band: up to £175,000 more for the family home
The residence nil-rate band (RNRB) adds up to £175,000 per person where a home the deceased lived in passes to direct descendants: children, grandchildren and their spouses, and expressly including stepchildren, adopted children and foster children.[2] Nieces, nephews and siblings do not qualify, however close the relationship.
Three points trip people up:
- It is capped at the home's value. If your share of the home is worth £120,000, your RNRB is £120,000, not £175,000. The nil-rate band covers the rest of the estate as normal.
- It tapers away for large estates. Above £2,000,000 of estate value, the RNRB is reduced by £1 for every £2 of excess. It is fully lost at £2.35m for a single person and £2.7m for a couple using both bands.[2]
- Downsizing does not destroy it. If the person sold their home or moved somewhere smaller on or after 8 July 2015, a downsizing addition can preserve the relief, provided assets of equivalent value pass to direct descendants.
Per person, and transferable between spouses
The threshold is a per-person allowance, but for married couples and civil partners it behaves like a shared one. Whatever percentage of the nil-rate band and RNRB the first person to die did not use transfers to the survivor's estate. Because assets left to a spouse are exempt anyway, the typical pattern is: first death, everything to the survivor, no tax, 100% of both allowances unused. Second death, the estate has £650,000 of nil-rate band plus up to £350,000 of RNRB, £1,000,000 in total.[1]
The transfer is claimed by the executors on the second death, it is not automatic, and the detail matters (especially for remarriage, earlier deaths before 2009, and estates near the taper). The full mechanics belong to our companion guide to the married couples' threshold and the RNRB, so we will not repeat them here. Unmarried couples get no transfer at all, whatever the length of the relationship, which is one of the most expensive gaps in UK tax law for cohabiting families.
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When is inheritance tax actually paid, and by whom?
Inheritance tax is a charge on the estate, not on individual inheritances. In practice:
- The personal representatives pay it. The executors named in the will (or administrators where there is no will) are responsible for reporting the estate to HMRC and paying the tax out of estate funds before distributing to beneficiaries. Our guide for executors covers the role in full.
- The deadline is six months. Tax is due by the end of the sixth month after the month of death; interest runs after that.[3]
- It usually comes before probate. At least part of the inheritance tax normally has to be paid before HM Courts and Tribunals Service will issue the grant, which is why estates with tax to pay often use the Direct Payment Scheme from the deceased's own bank accounts, or pay in instalments.
- Instalments are available on property. Tax attributable to land and certain business assets can be spread over up to ten annual instalments, with interest, which stops families being forced into an immediate sale of the home.
Beneficiaries only rarely pay inheritance tax personally, the main exception being tax on certain lifetime gifts where the giver died within seven years.
Pensions join the estate from April 2027
One forward change deserves a flag now. From 6 April 2027, unused pension funds and death benefits will be included in the estate for inheritance tax, with personal representatives liable for the tax. Death in service benefits are excluded. HMRC estimates around 10,500 estates a year will become newly liable and 38,500 will pay more, an average of roughly £34,000 extra each.[4]
For anyone with a meaningful pension pot, this changes whether the thresholds in this article are enough. Our research report on the 2027 pensions inheritance tax change sets out who is affected, and the pensions IHT 2027 estimator shows what the change could mean for your own figures.
Can you increase your inheritance tax threshold?
You cannot raise the statutory figures, but most families searching for "how to increase the inheritance tax threshold" are really asking how to make sure their estate uses everything it is entitled to. The legitimate basics:
- Qualify for the RNRB. Check your will actually leaves the home (or a share of it) to direct descendants. Some older will structures, particularly certain discretionary trusts, can accidentally forfeit the £175,000 band.
- Preserve the spousal transfer. Keep records of the first death, the will and the estate values. Executors on the second death will need them to claim the transferred allowances.
- Watch the £2,000,000 taper. Estates near that line lose £1 of RNRB for every £2 above it, an effective marginal rate well over 40% in the taper zone. Even the order in which assets are left can matter.
- Use lifetime gift exemptions. Everyone can give away £3,000 a year free of inheritance tax, plus small gifts of up to £250 per person and wedding gifts of £5,000 to a child, £2,500 to a grandchild or £1,000 to anyone else. Larger gifts fall out of the estate after seven years, with taper relief between years three and seven. Gifting is a big subject with real traps, so treat this as an introduction and see our inheritance tax pillar guide for the depth.
- Consider the 36% rate. Leaving 10% or more of your net estate to charity cuts the rate on the rest from 40% to 36%, and in some estates a modest increase in the charitable gift costs the other beneficiaries almost nothing.
Check where your estate stands
Thresholds frozen until 5 April 2031, rising asset values and the 2027 pension change mean more ordinary families will cross the line each year without their numbers ever feeling "wealthy". The starting point is simply knowing your figure: add up what you own, subtract what you owe, and set it against the allowances your estate can claim. Our free inheritance tax threshold calculator does exactly that, including the RNRB conditions and the spousal transfer, in a couple of minutes.
If the calculator suggests your estate is over, or close to, the threshold, it is worth getting proper advice on your specific circumstances. We are an information and calculators service, not a law firm, but we can connect you with a vetted estate planning specialist who can review your will, your allowances and your options. There is no charge for the introduction and no pressure to proceed.
- HM Revenue & Customs, "How Inheritance Tax works: thresholds, rules and allowances", GOV.UK. gov.uk/inheritance-tax.
- HM Revenue & Customs, "Inheritance Tax: residence nil rate band", GOV.UK guidance and Inheritance Tax Manual IHTM46000 onwards. gov.uk/guidance/inheritance-tax-residence-nil-rate-band.
- HM Revenue & Customs, "Pay your Inheritance Tax bill", GOV.UK. gov.uk/paying-inheritance-tax.
- HM Revenue & Customs, "Inheritance Tax: unused pension funds and death benefits", policy paper, GOV.UK. Unused pension funds and death benefits in scope from 6 April 2027. gov.uk/government/publications/inheritance-tax-unused-pension-funds-and-death-benefits.
- Inheritance Tax Act 1984, section 7 and Schedule 1A (rates of tax, including the 36% reduced rate for charitable estates). legislation.gov.uk/ukpga/1984/51.