Inheritance Tax Thresholds and Rates

How much an estate can pass on before Inheritance Tax is due, the extra allowance for passing on a home, and the rates charged above the thresholds.

Nil-rate band

£325,000

Estates below this value normally pay no Inheritance Tax. Any unused amount can pass to a surviving spouse or civil partner.

GOV.UK — HMRC · checked 30 Sep 2026

Residence nil-rate band

£175,000

An extra allowance when a home is left to children or grandchildren, taking the potential tax-free amount to £500,000.

GOV.UK — HMRC · checked 30 Sep 2026

Residence allowance starts to reduce above

£2,000,000

For estates worth more than this, the residence nil-rate band falls by £1 for every £2 over.

GOV.UK — HMRC · checked 30 Sep 2026

Standard rate

40%

Charged on the part of the estate above the available thresholds.

GOV.UK — HMRC · checked 30 Sep 2026

Reduced rate when leaving to charity

36%

Applies when at least 10% of the net estate is left to charity.

GOV.UK — HMRC · checked 30 Sep 2026