What is the inheritance tax threshold in the UK?
SunLife Content Team
Last updated 4 August 2026
4 min read
The inheritance tax threshold in the UK is the amount which can be inherited before having to pay inheritance tax. This is also known as the 'nil-rate band allowance'. The standard rate of inheritance tax above this threshold is 40%.
Inheritance and its related terms can be complex. If you’re not too familiar with the subject, first take a look at our glossary at the end of this article.
There are many factors which can impact how much inheritance tax you need to pay. For example, leaving money to charity. Read our complete guide to inheritance for more on this.
The current inheritance tax threshold in the UK for 2026/2027
In the UK, the standard inheritance tax threshold is £325,000. This means you’ll be taxed 40% on any inheritance above this threshold. You won't be taxed for any amount under this threshold.
The inheritance tax threshold will stay the same(www.gov.uk opens in a new tab) until at least April 2028.
However, there are certain circumstances where the threshold may increase (see below). In these cases, the tax-free allowance could be higher.
If you’re trying to calculate your inheritance tax, it’s important to know which thresholds apply to you and whether you qualify for more than the standard £325,000 allowance.
The next section explains the factors that can affect this. And, as always, it’s a good idea to talk to a financial adviser if you’re unsure.
Factors that can affect the inheritance tax threshold
The standard inheritance tax threshold in the UK is £325,000. But there are circumstances where this may increase. It depends on what the estate comprises of, and who the beneficiaries are.
Residence nil-rate band (RNRB)
The residence nil-rate band(www.gov.uk opens in a new tab) is an extra allowance given to the children or grandchildren of the deceased if they are inheriting a main home (as long as the estate is worth less than £2 million).
It's currently £175,000, and can be used in addition to the standard nil-rate band. This would increase the total tax-free allowance to £500,000.
If the total value of the estate is more than £500,000, then anything over this amount will be subject to the standard 40% tax rate.
Married couples and civil partners
If you’re married or in a civil partnership, the rules can be a little different. There are two key points to remember:
- If you leave everything above the threshold to your spouse or civil partner, it is all exempt from tax. (As long as they're living in the UK).
- If you don’t use all or even any of your allowance, the remaining amount can be transferred to your partner(www.gov.uk opens in a new tab). This includes the residence nil-rate band previously mentioned.
Together, these two rules mean the full nil-rate band and residence nil-rate band could be transferred to a surviving partner. This can leave them with up to £1 million in tax-free allowance.
For example, say Michael and Terri are married and own a home together. They have two children. When Michael passes away, he leaves all his money, belongings, and share of the property, to Terri. No inheritance tax is payable from his estate.
When Terri dies, she leaves all her money, belongings, and the house, to her two children. The total value of her estate is £800,000.
If she was only able to use her own allowance, her estate would be subject to 40% tax on any amount over the £500,000 threshold – this would be £120,000.
But, because Michael left everything to her, he did not use his own £500,000 tax-free allowance, and this can be added onto Terri’s. This means her total tax-free allowance is £1 million, and so there is no inheritance tax for her children to pay on her estate.
Inheritance tax threshold terms explained
| Term | Meaning |
|---|---|
| Nil-rate band | The threshold where someone's total asset value becomes subject to inheritance tax. Anything below the nil-rate band amount is not subject to inheritance tax. Currently this is £325,000. |
| Residence nil-rate band | An extra inheritance tax allowance, currently £175,000. It may apply when a main home is passed on to direct descendants, such as children or grandchildren. |
| Transferable nil-rate band | When any unused portion of the inheritance tax threshold is transferred to the deceased's surviving spouse or civil partner. |
| Taper relief | A tax relief that may apply to gifts made within seven years of death. Taper relief reduces the amount of inheritance tax owed on gifts. The amount due varies based on the number of years that have passed since the gift was made. |
| Estate | The total value of a person's assets, such as money, property, and investments. |
| Beneficiaries | People who are entitled to inherit a share of the assets from the estate. |
Further reading
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