UK Inheritance Tax Rates 2026/27
Every band and rate by tax year, the residence nil-rate band taper, and the 7-year gift taper table
Inheritance tax rates and thresholds by tax year
| Band or rate | 2026/27 | 2025/26 | 2024/25 | Applies |
|---|---|---|---|---|
| Nil-rate band (NRB) | £325,000 | £325,000 | £325,000 | Everyone gets this. Nothing is taxed below it |
| Residence nil-rate band (RNRB) | £175,000 | £175,000 | £175,000 | Extra band when a home passes to direct descendants |
| RNRB taper threshold | £2,000,000 | £2,000,000 | £2,000,000 | The RNRB starts being withdrawn once the estate passes this |
| Standard rate | 40% | 40% | 40% | Charged only on the part of the estate above the bands |
| Reduced rate (charity) | 36% | 36% | 36% | Applies to the whole taxable estate once the charity test is met |
| Charity test | 10% | 10% | 10% | Share of the net estate that must go to charity for the reduced rate |
| Annual gift exemption | £3,000 | £3,000 | £3,000 | Per donor per tax year, carried forward one year if unused |
Frozen until 5 April 2031
The nil-rate band, the residence nil-rate band and the £2,000,000 taper threshold are all fixed at their current levels until the end of the 2030-31 tax year. The nil-rate band has been £325,000 since April 2009, so the freeze is doing the work of a rate rise: as house prices and portfolios grow, more estates cross a threshold that has not moved.
What you can pass on before any tax
| Band | One person | Married or civil partners | Condition |
|---|---|---|---|
| Nil-rate band | £325,000 | £650,000 | Automatic |
| Residence nil-rate band | £175,000 | £350,000 | Home passed to direct descendants, estate under the taper threshold |
| Total tax-free | £500,000 | £1,000,000 | The couple column assumes 100% of the first estate's bands were unused |
Both bands transfer between spouses and civil partners, and what transfers is the unused percentage of the band in force at the first death, not a cash sum. That is why the survivor benefits if the band has risen in between, and why using half of the first threshold leaves the second estate with one and a half bands rather than a fixed shortfall. The claim must reach HMRC within 2 years of the second death.
The residence nil-rate band is the conditional one. It needs a property the deceased lived in at some point to pass on death to a direct descendant: a child, grandchild or other lineal descendant, including adopted, foster and stepchildren and children under a guardianship, plus their spouses or civil partners. Nephews, nieces, siblings and other relatives do not qualify, and neither does a home left to a discretionary trust. It is also capped at the value of the home, so a £120,000 property gives £120,000 of band, not £175,000.
The residence nil-rate band taper
Above £2,000,000 the residence nil-rate band is withdrawn by £1 for every £2 of estate value, so it takes £350,000 of extra estate to remove the whole £175,000 band. The test is the estate before reliefs and exemptions, which means an estate that ends up paying no tax can still lose the band.
| Estate value | Residence nil-rate band | Total threshold for one person |
|---|---|---|
| £2,000,000 | £175,000 | £500,000 |
| £2,050,000 | £150,000 | £475,000 |
| £2,100,000 | £125,000 | £450,000 |
| £2,150,000 | £100,000 | £425,000 |
| £2,200,000 | £75,000 | £400,000 |
| £2,250,000 | £50,000 | £375,000 |
| £2,300,000 | £25,000 | £350,000 |
| £2,350,000 | £0 (lost) | £325,000 |
One person's band, with a home worth at least £175,000 passing to direct descendants. A couple's transferred band tapers on the same estate value but from a larger starting figure, so it survives further up the range. Because £2 of estate costs £1 of band, every pound in the taper zone is effectively taxed at 60%.
The 7-year gift taper
A gift you make and survive by 7 years falls out of your estate entirely. Die within 7 years and the gift is added back. Taper relief then cuts the tax on gifts made more than three years before death.
| Years between gift and death | Taper relief | Rate of tax on the gift |
|---|---|---|
| Less than 3 years | 0% | 40% |
| 3 to 4 years | 20% | 32% |
| 4 to 5 years | 40% | 24% |
| 5 to 6 years | 60% | 16% |
| 6 to 7 years | 80% | 8% |
| 7 or more years | 100% | 0% |
Taper relief reduces the tax, not the gift
This is the rule people get wrong most often. The gift's full value still counts towards the estate; taper relief only scales down the tax charged on it. And gifts use the nil-rate band first, in date order, so a gift that fits inside the £325,000 band attracts no tax at all — which means there is nothing for taper relief to reduce. Taper relief only ever helps on gifts big enough to have exhausted the band.
Gifts you can make free of inheritance tax
These sit outside the 7-year rule altogether. A gift covered by an exemption is never added back into the estate, however soon afterwards you die.
| Exemption | Amount | Detail |
|---|---|---|
| Annual exemption | £3,000 | Per donor per tax year. An unused annual exemption can be carried forward 1 tax year only, so the most you can give in one year under it is £6,000. |
| Small gift allowance | £250 | Per person, as many people as you like each tax year — but not to someone who has already received another allowance from you in the same year. |
| Wedding gift: your child | £5,000 | Given on or shortly before the wedding or civil partnership ceremony. |
| Wedding gift: your grandchild or great-grandchild | £2,500 | Given on or shortly before the wedding or civil partnership ceremony. |
| Wedding gift: anyone else | £1,000 | Given on or shortly before the wedding or civil partnership ceremony. |
| Gifts to a spouse or civil partner | Unlimited | No Inheritance Tax on gifts between spouses or civil partners who live permanently in the UK. |
| Gifts to charity | Unlimited | Gifts to a registered charity or a political party are exempt in life and on death. |
| Normal expenditure out of income | Unlimited | Regular gifts from surplus income, provided you can still meet your normal living costs from what is left. |
Inheritance tax on an estate in 2026/27
No lifetime gifts, nothing left to a spouse or to charity. The first column is an estate with no home passing to direct descendants, so only the nil-rate band applies. The second adds the residence nil-rate band. The third assumes a widow or widower who inherited a full set of unused bands from their late spouse.
| Estate value | Nil-rate band only | With residence band | Bands from both spouses |
|---|---|---|---|
| £400,000 | £30,000 | £0 | £0 |
| £500,000 | £70,000 | £0 | £0 |
| £750,000 | £170,000 | £100,000 | £0 |
| £1,000,000 | £270,000 | £200,000 | £0 |
| £1,500,000 | £470,000 | £400,000 | £200,000 |
| £2,000,000 | £670,000 | £600,000 | £400,000 |
| £2,500,000 | £870,000 | £870,000 | £700,000 |
The middle and right columns assume a qualifying home worth at least the residence nil-rate band. Both lose that band to the taper in the top rows, which is why the gap between the columns narrows as the estate grows. To model gifts, a spouse exemption, a charity legacy or a partial transferred band, use the Inheritance Tax Calculator.
Pensions come inside the estate from 6 April 2027
The single biggest change ahead of these bands is not a rate. For deaths on or after 6 April 2027, most unused pension funds and pension death benefits become part of the estate for Inheritance Tax. A pension pot that today passes outside the estate will then be added to it and tested against the same £325,000 nil-rate band as everything else.
The existing exemptions survive: anything passing to a surviving spouse or civil partner, or to a registered charity, stays exempt, and death in service benefits from registered pension schemes are excluded from the change altogether. Personal representatives — not scheme administrators — are liable for reporting and paying the charge. Estates near the taper threshold are worth rechecking, because a pension added to the estate value can pull the residence nil-rate band into the taper zone even when the pension itself passes to a spouse.
Model the change against your own pot with the Pension IHT 2027 Planner.
Frequently asked questions
What is the inheritance tax threshold for 2026/27?
The nil-rate band is £325,000. A home passing to direct descendants can add a residence nil-rate band of £175,000, taking one person's threshold to £500,000. Both bands, and the £2,000,000 taper threshold, are frozen at these levels until the end of the 2030-31 tax year.
How much is inheritance tax?
40% on the part of the estate above the available bands — nothing at all below them. The rate falls to 36% on the whole taxable estate if you leave 10% or more of the net estate to charity. Gifts made in the 7 years before death are counted back in, and tax on them can be reduced by taper relief.
What is the residence nil-rate band?
An extra £175,000 band that applies when a home you have lived in passes on death to direct descendants — children, including adopted, foster and stepchildren, grandchildren and other lineal descendants, and their spouses or civil partners. Nephews, nieces and siblings do not count. It is capped at the value of the home, and it is withdrawn by £1 for every £2 the estate is worth above £2,000,000, so it is gone entirely at £2,350,000.
Can a couple pass on £1 million tax free?
A married couple or civil partners can reach £1,000,000, but only if the home passes to direct descendants and the first estate used none of its bands. Unused bands transfer as a percentage of the band in force when the first partner died, not as a cash amount, so a partial use on the first death reduces the second estate's threshold proportionately. Without a qualifying home the couple's combined threshold is £650,000.
What is the 7-year rule on gifts?
A gift is free of Inheritance Tax if you live for 7 years after making it. Die sooner and the gift is added back into your estate. Taper relief then reduces the tax on gifts made more than three years before death — 32% between three and four years, falling to 8% between six and seven. Taper relief reduces the tax on the gift, not the value of the gift, and it only helps once the gift has used up the nil-rate band.
How much can I give away each year without inheritance tax?
£3,000 a tax year under the annual exemption, and you can carry an unused annual exemption forward 1 year. On top of that you can give £250 each to as many different people as you like, wedding gifts of £5,000 to a child, £2,500 to a grandchild and £1,000 to anyone else, and unlimited regular gifts out of surplus income.
Will my pension be subject to inheritance tax?
From 6 April 2027, most unused pension funds and pension death benefits form part of the estate for Inheritance Tax. Death in service benefits from registered schemes are excluded, and the usual exemptions still apply, so anything passing to a surviving spouse or civil partner or to a registered charity remains exempt. Personal representatives, not scheme administrators, are responsible for reporting and paying the charge.
How do I claim a deceased spouse's unused threshold?
The personal representatives claim it, and the claim has to reach HMRC within 2 years of the death of the surviving spouse or civil partner. What transfers is the unused percentage of the band in force at the first death, applied to the band in force at the second — so if none of the first threshold was used, the survivor's nil-rate band doubles to £650,000.
Sources
- GOV.UK — Inheritance Tax
- HMRC — Inheritance Tax thresholds and interest rates
- HMRC — Inheritance Tax thresholds policy paper
- GOV.UK — Work out and apply the residence nil rate band
- GOV.UK — Transferring unused basic threshold
- GOV.UK — Inheritance Tax on gifts
- HMRC — Inheritance Tax on unused pension funds and death benefits
Reflects the 2026/27 inheritance tax bands and rates, verified against gov.uk.
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