Thresholds and rates
Inheritance tax threshold in 2026/27: what an estate can pass on tax free
The headline figure is the same as it has been for years. What has changed is how many estates reach it, and from April 2027 what is added up to test it.
The inheritance tax threshold for 2026/27 is £325,000 per person, the nil-rate band. An estate worth less than that after debts pays no inheritance tax, and above it the excess is taxed at 40 %. A second allowance, the residence nil-rate band of up to £175,000, is added when a home goes to children, grandchildren or other direct descendants, which takes one person's threshold to £500,000. A widow, widower or surviving civil partner can add whatever the late partner left unused, so a couple can pass on up to £1,000,000. All these figures are frozen until 5 April 2031. For deaths on or after 6 April 2027, unused pension funds count towards the threshold too: a single person with a £300,000 home left to two children, £150,000 of savings and a £250,000 pension owes £0 before the change and £80,000 after it.
Your inheritance tax threshold, 2026/27
Tax-free threshold
£500,000
| Nil-rate band | £325,000 |
| Residence nil-rate band | £175,000 |
| Inheritance tax at 40 % | £60,000 |
Law read and sums checked by Radif Partners · Editorial policy · How the tax is worked out
£325,000: the nil-rate band
Every individual has the same basic threshold, the nil-rate band, listed by GOV.UK at £325,000 for 2026/27. It applies to the estate after debts and after anything exempt has been taken out: what goes to a spouse or civil partner and what goes to charity. Only the part of the remaining chargeable estate above the band is taxed, at 40 %, or at 36 % where at least 10 % of the baseline amount is left to charity. Many people think of the threshold as a line that, once crossed, makes the whole estate taxable. It is not: an estate £10,000 over the band pays tax on £10,000.
Up to £500,000 with the family home
The residence nil-rate band sits on top of the basic band when a home the person lived in, or a share of it, passes to direct descendants. Its maximum is £175,000, but it is limited to the value of the home that the descendants inherit, so a modest flat may earn less than the full amount. It cannot be set against savings or investments, and a home left to a brother, a niece or a partner who is not married to a descendant earns none. The residence nil-rate band guide explains who counts as a descendant and what happens when the home is sold.
A couple: up to £1,000,000
Spouses and civil partners cannot pool their bands while both are alive, but the second estate inherits the unused percentage of the first. When the first partner leaves everything to the survivor, nothing of either band is used, and the survivor's estate can claim a second nil-rate band and a second residence band. With a home worth at least £350,000 left to children, the threshold for that second estate reaches £1,000,000. Legacies to children at the first death use up part of the first band and reduce the transfer, as the transferable band page shows with figures.
The threshold by situation
The table runs the site's engine on a series of estates, all large enough to use their full bands. It shows how much nil-rate band and residence band each one gets for a death in 2026/27 or later under the frozen figures.
| Situation | Nil-rate band | Residence band | Total threshold |
|---|---|---|---|
| Single, no home passing to descendants | £325,000 | £0 | £325,000 |
| Single, home worth £400,000 to children | £325,000 | £175,000 | £500,000 |
| Single, home worth £120,000 to children | £325,000 | £120,000 | £445,000 |
| Widowed, both late spouse’s bands unused, home to children | £650,000 | £350,000 | £1,000,000 |
| Widowed, both bands unused, home to a nephew | £650,000 | £0 | £650,000 |
| Widowed, half the late spouse’s nil-rate band unused | £487,500 | £350,000 | £837,500 |
| Single, estate of £2,200,000, home to children | £325,000 | £75,000 | £400,000 |
| Widowed, estate of £2,500,000, both bands unused | £650,000 | £100,000 | £750,000 |
The last two rows show the taper: once the estate passes £2,000,000, the residence band falls by £1 for every £2 above it, transferred band included. The taper guide has the exact points where it runs out. Use the calculator at the top of this page to enter your own estate and home.
Frozen until 5 April 2031
The bands used to rise each year with consumer prices. Section 86 of the Finance Act 2021 switched that off, and later Acts extended the freeze twice; the last extension, in section 72 of the Finance Act 2026, keeps both bands fixed for every tax year up to and including 2030/31. As house prices and savings grow and the threshold stays still, more estates cross it each year; the page on the freeze projects an estate to the end of the period.
What counts against the threshold from April 2027
Until 6 April 2027, a pension paid at the trustees' discretion stayed outside the estate, so a family could have a threshold comfortably above the house and savings and owe nothing. For deaths from that date, section 150A adds unused pension funds and lump sum death benefits to the estate, and the threshold is compared with the total. The single person in the summary has a home of £300,000 and savings of £150,000, well below a threshold of £500,000. Add the £250,000 pension and the estate counted for tax becomes £700,000; the bill moves from £0 to £80,000.
Some pension benefits stay out of the reckoning. Dependants' scheme pensions, joint life annuities bought with the member's annuity and death in service benefits from a current job are excluded. Pension money going to a spouse, civil partner or charity counts in the estate but is exempt, so it does not use the threshold. The pension also counts for the taper, which can now catch estates whose house and savings alone are well under £2,000,000.
Gifts made in the 7 years before death
Lifetime gifts above the exemptions are not taxed when made, but if the giver dies within 7 years they are brought back and set against the nil-rate band first, oldest first, as GOV.UK’s gifts guidance explains. A £100,000 gift to a grandchild three years before death leaves £225,000 of nil-rate band for the estate. On a £600,000 estate with a £300,000 home left to children, that raises the tax from £40,000 to £80,000. The residence band is untouched, since it never applies to gifts.
The same figures in 2026, 2027 and beyond
Searches for the threshold usually name a year, but under the freeze the answer does not move with it. The 2026/27 tax year, from 6 April 2026 to 5 April 2027, uses £325,000 and £175,000; so will 2027/28 and each following year up to 2030/31. What changes in April 2027 is the content of the estate, not the size of the bands. A threshold that comfortably covered a family's house and savings in 2026 can be overtaken in 2027 simply because a pension is now added to the same total, with no change to the family's assets at all.
Leaving part of the estate to charity
A gift to a charity in the will is exempt, so it reduces what is set against the threshold. It also opens a lower rate. If the charitable gifts reach 10 % of the baseline amount, worked out by deducting the nil-rate band still available from the estate after exemptions and adding back the gift, the rest of the estate above the threshold is taxed at 36 %. The residence band is not deducted in that baseline. The charity rate page sets out the arithmetic.
Once the threshold is passed
Tax on the part above the threshold is due within 6 months of the end of the month of death, and interest runs after that. A payment is usually needed before the executors can obtain probate, or confirmation in Scotland. From April 2027 the tax that falls on a pension can be paid by the scheme itself, on a payment notice from the representatives or a beneficiary, which spares them from finding cash before the rest of the estate is released.
Reading your own threshold
For most estates the threshold is the sum of three answers: the nil-rate band less recent gifts, the residence band if a home goes to descendants, and any share transferred from a late spouse or civil partner, all reduced if the estate passes £2,000,000. The calculator above combines them. It gives a figure for information, not a valuation or advice; the executors, a solicitor or a regulated adviser confirm the position for a real estate.