2026/27
Inheritance tax
- Nil-rate band£325,000
- Residence nil-rate band£175,000 Tapered if estate over £2m
- Lifetime rate£20 %
- Death rate£40 %
- Death rate with 10%+ to charity£36 %
- Annual exemption£3,000
- Small gifts allowance£250
- Marriage gift — parent£5,000
- Marriage gift — grandparent£2,500
- Marriage gift — other£1,000
Taper relief: 0–3 yr 100% · 3–4 yr 80% · 4–5 yr 60% · 5–6 yr 40% · 6–7 yr 20%.
IHT rates at a glance
| Situation | Rate |
|---|---|
| Death rate (above nil-rate band) | 40% |
| Death rate where ≥10% of net estate left to charity | 36% |
| Lifetime rate on chargeable transfers | 20% |
| Tapered relief on gifts (3–7 years before death) | 8–32% |
Gifts more than seven years before death are normally outside the estate. Taper relief reduces the rate on gifts made 3–7 years before death.
Inheritance Tax (IHT) overview
IHT can be charged on your estate when you die, and on some gifts made in the seven years before death. Each person has a nil-rate band, with an additional residence nil-rate band where a home passes to direct descendants. Estates above the bands are taxed at the death rate, reduced where enough is left to charity.
Lifetime planning — gifts, trusts and reliefs — can reduce or remove the charge. Our inheritance tax and estates & wills services help you pass on more of your wealth.
Frequently asked
How much can I pass on tax-free?+
The nil-rate band, plus the residence nil-rate band where your home passes to children or grandchildren. Married couples and civil partners can combine unused bands. See the figures above.
Are gifts taxable?+
Gifts more than seven years before death are normally outside the estate. Gifts made within seven years may be taxable, with taper relief reducing the rate over time.