What is the UK Inheritance Tax threshold for 2026/27?

The Nil-Rate Band (NRB) is £325,000 - frozen until April 2030. If you pass your main residence to direct descendants (children, stepchildren, grandchildren), an additional Residence Nil-Rate Band (RNRB) of £175,000 applies, bringing the combined threshold to £500,000 for a single person or up to £1 million for a couple with full spouse transfer.

What is the Inheritance Tax rate?

40% on anything above the available threshold. A reduced 36% rate applies if 10% or more of the net estate is left to charity - a meaningful saving for larger estates. The charity amount itself is always exempt (0% IHT on charity legacies regardless of proportion).

How does RNRB tapering work?

If the total estate value exceeds £2,000,000 , the RNRB tapers by £1 for every £2 above the threshold. A single person loses the full £175,000 RNRB at £2,350,000. A couple with both RNRBs combined loses the full £350,000 at an estate value of £2,700,000. This is why some estate planning focuses on getting total assets below £2m.

Can unused spouse allowances transfer to me?

Yes - when a spouse or civil partner dies leaving unused NRB or RNRB, 100% of the unused percentage passes to the survivor's estate. A widow who inherits everything tax-free can use a combined £1 million threshold (2× NRB + 2× RNRB) if she passes the main residence to direct descendants and the estate is below £2m.

What changed in the Autumn Budget 2024?

Agricultural Property Relief (APR) and Business Property Relief (BPR) : from 6 April 2026, 100% relief is capped at the first £2.5 million of combined agricultural and business assets (raised from the originally proposed £1m). Relief above £2.5m drops to 50%. This calculator assumes standard estate assets - farmers and business owners should consult a specialist.

Are pensions included in the estate for IHT?

Not in 2026/27 - most defined contribution pension funds remain outside the IHT estate. From 6 April 2027 , the government plans to bring most unused pension funds and death benefits into the IHT estate. This is a major change for estate planning but doesn't affect 2026/27 calculations (this tool follows 2026/27 rules).

What assets count in the estate?

Everything you own minus debts: property (main home + second homes), cash and savings, investments (shares, bonds, ISAs - yes, ISAs are in the estate), valuables (jewellery, art, cars), business interests, agricultural land, and life insurance NOT written in trust. Outgoings reducing it: mortgages, loans, unpaid bills, funeral costs.

When does IHT need to be paid?

IHT must usually be paid within 6 months of the end of the month of death , or HMRC charges interest on the unpaid balance. Executors must also submit an IHT400 form within 12 months . Residential property can be paid by 10 yearly instalments, but interest still accrues. Grant of probate is usually issued only after IHT has been at least partly paid.

Inheritance Tax on a £300,000 Estate UK 2026/27

UK Inheritance Tax on a £300,000 estate depends heavily on the deceased's circumstances. The single biggest variable is whether a deceased spouse's unused Nil Rate Band and Residence Nil Rate Band are available to transfer. A widow or widower can combine the £325k NRB + £175k RNRB twice - effectively £1m of tax-free threshold - bringing IHT to zero on estates up to £1m.

Single, home to children

£0

Allowance £500,000, effective 0.00%

Widow, full spouse transfer

£0

Allowance £1,000,000 combined

Widow + 10% charity (36% rate)

£0

Saves £0 vs no charity

RNRB tapering at this estate value

The £2,000,000 RNRB taper threshold is not triggered at £300,000, so the full £175,000 RNRB (or £350,000 with spouse transfer) is preserved when the main residence passes to direct descendants.

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Frequently asked questions

What is the UK Inheritance Tax threshold for 2026/27?: The Nil-Rate Band (NRB) is £325,000 - frozen until April 2030. If you pass your main residence to direct descendants (children, stepchildren, grandchildren), an additional Residence Nil-Rate Band (RNRB) of £175,000 applies, bringing the combined threshold to £500,000 for a single person or up to £1 million for a couple with full spouse transfer.
What is the Inheritance Tax rate?: 40% on anything above the available threshold. A reduced 36% rate applies if 10% or more of the net estate is left to charity - a meaningful saving for larger estates. The charity amount itself is always exempt (0% IHT on charity legacies regardless of proportion).
How does RNRB tapering work?: If the total estate value exceeds £2,000,000, the RNRB tapers by £1 for every £2 above the threshold. A single person loses the full £175,000 RNRB at £2,350,000. A couple with both RNRBs combined loses the full £350,000 at an estate value of £2,700,000. This is why some estate planning focuses on getting total assets below £2m.
Can unused spouse allowances transfer to me?: Yes - when a spouse or civil partner dies leaving unused NRB or RNRB, 100% of the unused percentage passes to the survivor's estate. A widow who inherits everything tax-free can use a combined £1 million threshold (2× NRB + 2× RNRB) if she passes the main residence to direct descendants and the estate is below £2m.
What changed in the Autumn Budget 2024?: Agricultural Property Relief (APR) and Business Property Relief (BPR): from 6 April 2026, 100% relief is capped at the first £2.5 million of combined agricultural and business assets (raised from the originally proposed £1m). Relief above £2.5m drops to 50%. This calculator assumes standard estate assets - farmers and business owners should consult a specialist.
Are pensions included in the estate for IHT?: Not in 2026/27 - most defined contribution pension funds remain outside the IHT estate. From 6 April 2027, the government plans to bring most unused pension funds and death benefits into the IHT estate. This is a major change for estate planning but doesn't affect 2026/27 calculations (this tool follows 2026/27 rules).
What assets count in the estate?: Everything you own minus debts: property (main home + second homes), cash and savings, investments (shares, bonds, ISAs - yes, ISAs are in the estate), valuables (jewellery, art, cars), business interests, agricultural land, and life insurance NOT written in trust. Outgoings reducing it: mortgages, loans, unpaid bills, funeral costs.
When does IHT need to be paid?: IHT must usually be paid within 6 months of the end of the month of death, or HMRC charges interest on the unpaid balance. Executors must also submit an IHT400 form within 12 months. Residential property can be paid by 10 yearly instalments, but interest still accrues. Grant of probate is usually issued only after IHT has been at least partly paid.