Answers · UK 2025/26
How much Inheritance Tax is due on a £1,000,000 estate?
A £1,000,000 estate left to children with a qualifying home pays £200,000 Inheritance Tax in 2026/27 for a single person, since £500,000 of the estate exceeds the combined £500,000 threshold (£325,000 nil rate band plus £175,000 residence nil rate band). A married couple's combined £1,000,000 threshold could reduce this to £0.
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Inheritance Tax in 2026/27 is charged at 40% on the value of an estate above the available nil rate bands. A single person has a standard nil rate band of £325,000, plus, if they own a home and leave it to direct descendants, a residence nil rate band of £175,000, giving a combined threshold of £500,000. On a £1,000,000 estate with a qualifying home left to children, exactly £500,000 exceeds this threshold, so Inheritance Tax of 40% x £500,000 = £200,000 is due for a single person's estate. However, married couples and civil partners can transfer any unused nil rate band and residence nil rate band from the first death to the surviving spouse, doubling the combined threshold to £1,000,000. Since transfers between spouses are always exempt from Inheritance Tax regardless of amount, a £1,000,000 estate passed entirely to a surviving spouse on the first death would owe nothing, and the full doubled £1,000,000 allowance would then be available against the estate on the second death -- meaning a couple who plan their wills carefully can pass on £1,000,000 completely tax-free. Note the residence nil rate band tapers for estates above £2,000,000, which is not yet relevant here. Professional advice is strongly recommended for estates at this level.
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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.