Inheritance Tax on a £3,000,000 Estate — UK 2025/26
On a £3,000,000 UK estate for 2025/26, inheritance tax (IHT) is £940,000 — an effective rate of 31.33% on the full estate. The combined allowances of £650,000 cover the first slice; the remaining £2,350,000 is taxed at 40%.
Assumption: figures assume a married couple where the first spouse left everything to the survivor (so 100% of the NRB and RNRB transfer), and the survivor leaves the main residence to direct descendants (children/grandchildren). This is the most common planning scenario used to illustrate IHT.
Total IHT
£940,000
on £3,000,000 estate
Effective rate
31.33%
of gross estate
Allowance & Tax Breakdown
Couple nil-rate band (2 × £325,000)£650,000
Couple residence nil-rate band (max £350,000)£0
Less: RNRB taper (estate > £2,000,000)−£350,000
Total tax-free allowance£650,000
Taxable estate£2,350,000
IHT rate40%
Total inheritance tax£940,000
How UK inheritance tax works in 2025/26
UK inheritance tax is charged at 40% on the value of an estate above the available allowances. Every individual has a nil-rate band of £325,000 and, where a qualifying main residence is left to direct descendants, an additional residence nil-rate band of £175,000. Anything passing between spouses or civil partners is fully exempt, and any unused allowance on the first death transfers to the surviving spouse — so a couple can shelter up to £1,000,000 before IHT bites.
The RNRB starts to taper once the estate exceeds £2,000,000, losing £1 of allowance for every £2 of excess. On a £3,000,000 estate the excess over the taper threshold is £1,000,000, which reduces the couple's RNRB by £350,000 — leaving £0 of RNRB still available. Combined with the full £650,000 couple NRB, that gives a total tax-free allowance of £650,000.
A reduced rate of 36% applies where at least 10% of the net estate is left to charity — useful planning for larger estates such as this one. Lifetime gifts (Potentially Exempt Transfers) drop out of the estate after 7 years, with taper relief on tax due for gifts between 3 and 7 years old. Business and Agricultural Property Relief can also significantly reduce the bill on qualifying trading or farming assets.
How much inheritance tax is due on a £3,000,000 estate?
On a £3,000,000 UK estate for 2025/26, assuming a married couple passing the main residence to direct descendants, inheritance tax is £940,000. The combined allowances (2 × NRB of £325,000 plus 2 × RNRB of £175,000, tapered above £2,000,000) total £650,000. The remaining £2,350,000 is taxed at 40%.
What is the residence nil-rate band and does £3,000,000 qualify?
The residence nil-rate band (RNRB) is an extra £175,000 per person on top of the standard nil-rate band, available when a qualifying main residence is left to direct descendants (children, grandchildren, step/adopted/foster children). For a couple that's up to £350,000. The RNRB tapers at £1 for every £2 the estate exceeds £2,000,000, so on a £3,000,000 estate the available RNRB is £0.
Can the IHT bill on £3,000,000 be reduced?
Common planning steps that may reduce the £940,000 bill include: lifetime gifts that survive 7 years (potentially exempt transfers), leaving 10%+ of the net estate to charity to drop the rate from 40% to 36%, using the spousal exemption for transfers between spouses, pension nominations (currently outside the estate, changing from April 2027), and Business / Agricultural Property Relief on qualifying assets. Take qualified advice before acting — IHT planning is highly fact-specific.
Disclaimer: Figures assume a married couple, full transfer of unused allowances on first death, and the main residence passing to direct descendants. Single individuals, unmarried couples, estates without a qualifying residence, or those with significant lifetime gifts will see different results. IHT planning is complex — speak to a STEP-qualified solicitor or chartered tax adviser for tailored advice.