Answers · UK 2025/26
What is the inheritance tax threshold UK 2025?
The inheritance tax (IHT) nil-rate band remains £325,000 for 2025/26. The residence nil-rate band adds £175,000 when a home is left to direct descendants, giving a potential £500,000 threshold per person (up to £1 million for a married couple using both allowances). IHT is charged at 40% on the taxable estate above these bands.
Full answer
IHT thresholds 2025/26: Nil-Rate Band (NRB) — £325,000 per person, frozen until April 2030. Residence Nil-Rate Band (RNRB) — £175,000 when the deceased's main home is inherited by direct descendants (children, grandchildren). Combined maximum per individual: £500,000. Married couples / civil partners: unused NRB and RNRB transfer to the surviving spouse — enabling a potential £1 million threshold on second death. Tapering: RNRB reduces by £1 for every £2 of net estate above £2 million, eliminating at £2.35 million for a single person. Rate: 40% on the chargeable estate above allowances; 36% if at least 10% of net estate is left to charity. Exemptions: transfers between spouses are always exempt; annual gift exemption £3,000; small gifts £250/person/year; normal expenditure out of income; gifts from surplus income (not capital); potentially exempt transfers (PETs) — gifts survive seven years without IHT. From 2027: unused pension pots will be included in estates for IHT purposes.
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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.