Inheritance Tax

What is the UK inheritance tax threshold?

Answered by Jordan Onraet-Wells, Founder & Chartered Tax Adviser (CTA). Published 28 July 2026. Last reviewed 28 July 2026.

The short answer

The UK inheritance tax threshold is £325,000 per person, known as the nil-rate band, and estates are taxed at 40% only on the value above it. If you leave your home to children or grandchildren, a residence nil-rate band of up to £175,000 can lift your tax-free threshold to £500,000. Married couples and civil partners can combine unused allowances, so a couple can often pass on up to £1 million with no inheritance tax at all.

The nil-rate band is £325,000 per person and is frozen until 5 April 2031.
The standard inheritance tax rate is 40%, charged only on the part of the estate above your available allowances.
The residence nil-rate band adds up to £175,000 where your home passes to direct descendants such as children, grandchildren, step-children, adopted or foster children.
The residence nil-rate band tapers away by £1 for every £2 your estate exceeds £2 million, so it is fully lost at £2.35 million.
Unused allowances transfer to a surviving spouse or civil partner, giving couples a combined maximum of up to £1 million.
A reduced rate of 36% applies where at least 10% of the net estate is left to charity.

How the £325,000 nil-rate band works

Every individual has a nil-rate band of £325,000. This part of your estate is taxed at 0%, and the standard 40% rate applies only to the value above your available allowances. The band has been fixed at £325,000 since 2009/10 and, following the extension announced at Budget 2025, it is frozen until 5 April 2031, which pulls more estates into the tax as asset values rise. Many estates still pay nothing, either because they sit below the threshold or because everything passes to an exempt beneficiary such as a spouse or a charity. Our guide to UK inheritance tax covers the full calculation, including lifetime gifts and the 7-year rule.

The residence nil-rate band on top

If you leave your main home, or the proceeds of one you sold, to direct descendants, a residence nil-rate band of up to £175,000 per person sits on top of the £325,000, taking an individual's tax-free threshold to as much as £500,000. Direct descendants include children, grandchildren, step-children, adopted children and foster children, but not siblings, nieces or nephews. The allowance is capped at the value of the home share passing to descendants, and it tapers away by £1 for every £2 that the estate exceeds £2 million, disappearing entirely at £2.35 million. It is also frozen until 5 April 2031.

The couple position

Anything left to a spouse or civil partner who is a UK long-term resident is exempt from inheritance tax without limit, and the first partner's unused nil-rate bands are not wasted. When the second partner dies, their estate can claim two nil-rate bands (£650,000) plus two residence nil-rate bands (£350,000), a combined £1 million tax-free. The full amount only applies where a qualifying home passes to direct descendants and the estate stays below the £2 million taper threshold, and the transfer of unused bands must be claimed by the personal representatives; it is not automatic.

Go deeper

Sources and further reading

This is general information for the 2026/27 UK tax year, not personal tax advice; speak to a Chartered Tax Adviser about your own position.

Applies to you? Ask us directly

A page can only take you so far. Book a free 30-minute clarity call with Jordan, a Chartered Tax Adviser, and get this answered for your exact situation, on a fixed fee agreed upfront.

All quick answers