Answers · UK 2025/26
How much Inheritance Tax is due on a £500,000 estate in the UK?
A £500,000 estate often pays no Inheritance Tax for 2026/27. The nil-rate band is £325,000, and if you leave your home to children or grandchildren you can also use the £175,000 residence nil-rate band, giving £500,000 tax-free. Without the residence band, £175,000 would be taxed at 40% (£70,000).
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Inheritance Tax for 2026/27 is charged at 40% on the value of an estate above the available nil-rate bands. Everyone has a standard nil-rate band of £325,000. If you leave your main home (or a share of it) to direct descendants such as children or grandchildren, you can also claim the residence nil-rate band of £175,000, taking the total to £500,000. So a £500,000 estate that includes a qualifying home left to children typically pays no Inheritance Tax at all. If the residence nil-rate band does not apply, for example because there is no home or it is left to a sibling, only the £325,000 standard band is available, so £175,000 is taxable at 40%, a bill of £70,000. Transfers between spouses and civil partners are exempt, and any unused nil-rate bands pass to the surviving partner, so a married couple can often pass on up to £1,000,000 combined. The residence nil-rate band is tapered away for estates above £2,000,000, reducing by £1 for every £2 over that threshold. Leaving at least 10% of the net estate to charity cuts the IHT rate from 40% to 36% on the rest. Use the Inheritance Tax calculator to model your estate and available allowances.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.