How much is Inheritance Tax in 2026?

Full answer

Inheritance Tax (IHT) in 2026 is charged at 40% on the value of your estate above the available tax-free thresholds. The basic nil-rate band is £325,000 — estates below this pay no IHT. On top, the residence nil-rate band adds up to £175,000 where you leave your main home (or its value) to direct descendants such as children or grandchildren, potentially raising an individual's threshold to £500,000. Both bands are frozen until 2030. Transfers between spouses and civil partners are completely exempt, and any unused nil-rate bands pass to the surviving partner — so a married couple can combine allowances to leave up to £1 million free of IHT. Worked example: a widow leaves an estate of £700,000 including her home to her children, and inherited her late husband's unused bands. With two nil-rate bands (£650,000) plus two residence bands (£350,000), her effective threshold is £1 million, so no IHT is due. By contrast, a single person with a £700,000 estate and a £500,000 threshold would pay 40% on £200,000 = £80,000. The residence nil-rate band tapers away by £1 for every £2 once an estate exceeds £2 million. A reduced 36% rate applies if at least 10% of the net estate is left to charity. Lifetime gifts may fall outside the estate if you survive seven years (potentially exempt transfers), with taper relief on the tax for gifts made three to seven years before death. Use the Inheritance Tax calculator to estimate a potential bill.

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