How much can you inherit without paying Inheritance Tax in the UK?

Full answer

**Inheritance Tax (IHT)** is charged at **40%** on the value of an estate above the available nil-rate bands. For most people, careful planning can substantially reduce or eliminate the IHT bill. **2026/27 nil-rate bands:** | Allowance | Amount | |---|---| | Nil-Rate Band (NRB) | **£325,000** per person | | Residence Nil-Rate Band (RNRB) | **£175,000** per person | | **Combined for married couple** | **Up to £1,000,000** | **Residence Nil-Rate Band (RNRB) conditions:** - The deceased must have owned a **residential property** - The property (or an equivalent value from proceeds) must pass to **direct descendants** (children, grandchildren, stepchildren) - Tapers away by £1 for every £2 of estate above **£2,000,000** — fully withdrawn at £2,350,000 **Transferable allowances (between spouses/civil partners):** Unused NRB and RNRB can be transferred to the surviving spouse. A widow with a spouse who used none of their allowances can claim: - NRB: £325,000 × 2 = £650,000 - RNRB: £175,000 × 2 = £350,000 - Total tax-free: **£1,000,000** **IHT rate and charity:** - Standard rate: **40%** above threshold - Reduced rate: **36%** if 10% or more of the net estate is left to charity **Key exemptions and reliefs:** - **Annual gift exemption:** £3,000/year (can carry forward 1 year) - **Small gifts:** £250 to any number of individuals per year - **Wedding gifts:** £5,000 (parent), £2,500 (grandparent), £1,000 (other) - **Normal expenditure out of income:** Unlimited if regular, from surplus income - **Potentially Exempt Transfers (PETs):** Gifts become fully exempt if donor survives **7 years** - **Business Property Relief (BPR):** 100% relief on qualifying business assets - **Agricultural Property Relief (APR):** 100% on qualifying farmland

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