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

The Nil-Rate Band (NRB) is £325,000 - frozen until April 2031. 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 married couple or civil partners with full spouse transfer. The residence band cannot exceed the value of the home and tapers away above £2 million.

What is the Inheritance Tax rate?

40% on anything above the available threshold. A reduced 36% rate applies if at least 10% of the "baseline amount" is left to charity - broadly the estate after the nil-rate band, with the charity gift added back; the residence nil-rate band is not deducted (IHTA 1984 Sch 1A; HMRC IHTM45009). The charity gift itself is always exempt, whatever its size.

How does RNRB tapering work?

If the estate exceeds £2,000,000 , the RNRB tapers by £1 for every £2 above the threshold. A single person loses the full £175,000 at £2,350,000; a combined £350,000 is gone at £2,700,000. The estate is measured after debts but before exemptions and reliefs, so a charity or spouse legacy, or business or agricultural relief, does not bring it under the threshold (GOV.UK residence nil rate band guidance).

Can unused spouse allowances transfer to me?

Yes - when a spouse or civil partner dies, the unused percentage of their NRB and RNRB can be added to the survivor's own bands at the survivor's death. A survivor who inherited everything from their spouse can have up to £1 million (2 × NRB + 2 × RNRB) if a home worth at least £350,000 passes to direct descendants and the estate is not above £2 million. The executors claim the transferred bands on forms IHT402 and IHT436 (IHTA 1984 ss.8A-8B and 8L).

What changed in the Autumn Budget 2024?

Agricultural Property Relief (APR) and Business Property Relief (BPR) : from 6 April 2026, 100% relief is limited to a £2.5 million allowance across combined agricultural and business property (raised from the originally proposed £1m), with 50% relief above it; unused allowance can pass to a spouse or civil partner (Finance Act 2026 Sch 12). This calculator assumes standard estate assets - farmers and business owners should take specialist advice.

Are pensions included in the estate for IHT?

For deaths before 6 April 2027 , most pension funds are outside the IHT estate. For deaths on or after that date, Finance Act 2026 (sections 66 to 71) brings most unused pension funds and pension death benefits into the estate; death-in-service lump sums and some dependants' scheme pensions are excluded. This tool follows the rules for deaths in 2026/27, so it does not include pensions.

What assets count in the estate?

Everything you own minus debts: property (main home and second homes), cash and savings, investments (shares, bonds and ISAs - ISAs are in the estate), valuables (jewellery, art, cars), business interests, agricultural land, and life insurance not written in trust. Deductions include mortgages, loans, unpaid bills and reasonable funeral expenses (IHTA 1984 s.172).

When does IHT need to be paid?

IHT must be paid by the end of the sixth month after the death (for a death in January, by 31 July), or HMRC charges interest. Where an IHT400 is needed it is due within 12 months of the death. Tax on land and buildings, and some business assets, can usually be paid in 10 yearly instalments, with interest. You usually need to pay some of the tax before getting probate (GOV.UK Pay your Inheritance Tax bill).

Inheritance Tax on a £500,000 Estate with 10% to Charity

Leaving 10% (£50,000) of a £500,000 estate to charity qualifies for the reduced 36% IHT rate (the legacy is at least 10% of the "baseline amount", the estate after the nil-rate band with the gift added back). IHT due: £0, saving £0 compared to leaving nothing to charity.

IHT due

£0

Applied rate 36%

Effective rate on estate

0.00%

IHT ÷ estate value

36% reduced rate?

Yes

10%+ of baseline amount to charity

Net to beneficiaries

£450,000

After IHT and charity legacy

Charity legacy comparison at £500,000

How leaving 0% to 20% of a £500,000 estate to charity changes the IHT bill. The reduced 36% rate kicks in once the charity legacy is at least 10% of the baseline amount (£17,500 here). Single person, home to descendants, no spouse-transferred bands.

Charity %	Charity legacy	Rate	IHT due	Net to beneficiaries
0%	£0	40%	£0	£500,000
5%	£25,000	36% (reduced)	£0	£475,000
10% (this page)	£50,000	36% (reduced)	£0	£450,000
15%	£75,000	36% (reduced)	£0	£425,000
20%	£100,000	36% (reduced)	£0	£400,000

Where a row crosses the 10% test, the applied rate flips from 40% to 36% on the entire taxable estate, not just the marginal slice. For estates well above the £500,000 allowance, the saving from the rate cut often exceeds the additional charity legacy needed to reach 10%.

How the 10% charity threshold works

The reduced 36% rate applies when charitable legacies make up at least 10% of the baseline amount defined in Schedule 1A of the Inheritance Tax Act 1984: the estate less the charity legacy and the available nil-rate band (£325,000, plus any band transferred from a late spouse), with the charity legacy then added back. The Residence Nil-Rate Band is not deducted (HMRC IHTM45009).

At £500,000, the baseline amount for a single person is £175,000, so the 10% threshold is £17,500 of charity legacy. Any amount at or above that figure unlocks the 36% rate. RNRB tapering above £2m changes the tax but not this test.

The charity legacy itself is always 100% exempt from IHT - whether it is 1% or 100% of the estate. The 36% rate is a discount on the rest of the taxable estate, not a tax on the charity portion. This page assumes a single person passing the main residence to direct descendants; a widow or widower with full spouse-transferred bands would have a £1m combined threshold and lower IHT at every charity percentage.

Run your own scenario

This page models a single person with no spouse-transferred bands. For widows/widowers, joint estates, RNRB tapering above £2m, or different charity amounts, use the full Inheritance Tax Calculator on the hub page.

See also: all IHT scenarios at £500,000 (compares single, widow with spouse transfer, and 10% charity routes at this estate value).

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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 2031. 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 married couple or civil partners with full spouse transfer. The residence band cannot exceed the value of the home and tapers away above £2 million.
What is the Inheritance Tax rate?: 40% on anything above the available threshold. A reduced 36% rate applies if at least 10% of the "baseline amount" is left to charity - broadly the estate after the nil-rate band, with the charity gift added back; the residence nil-rate band is not deducted (IHTA 1984 Sch 1A; HMRC IHTM45009). The charity gift itself is always exempt, whatever its size.
How does RNRB tapering work?: If the estate exceeds £2,000,000, the RNRB tapers by £1 for every £2 above the threshold. A single person loses the full £175,000 at £2,350,000; a combined £350,000 is gone at £2,700,000. The estate is measured after debts but before exemptions and reliefs, so a charity or spouse legacy, or business or agricultural relief, does not bring it under the threshold (GOV.UK residence nil rate band guidance).
Can unused spouse allowances transfer to me?: Yes - when a spouse or civil partner dies, the unused percentage of their NRB and RNRB can be added to the survivor's own bands at the survivor's death. A survivor who inherited everything from their spouse can have up to £1 million (2 × NRB + 2 × RNRB) if a home worth at least £350,000 passes to direct descendants and the estate is not above £2 million. The executors claim the transferred bands on forms IHT402 and IHT436 (IHTA 1984 ss.8A-8B and 8L).
What changed in the Autumn Budget 2024?: Agricultural Property Relief (APR) and Business Property Relief (BPR): from 6 April 2026, 100% relief is limited to a £2.5 million allowance across combined agricultural and business property (raised from the originally proposed £1m), with 50% relief above it; unused allowance can pass to a spouse or civil partner (Finance Act 2026 Sch 12). This calculator assumes standard estate assets - farmers and business owners should take specialist advice.
Are pensions included in the estate for IHT?: For deaths before 6 April 2027, most pension funds are outside the IHT estate. For deaths on or after that date, Finance Act 2026 (sections 66 to 71) brings most unused pension funds and pension death benefits into the estate; death-in-service lump sums and some dependants' scheme pensions are excluded. This tool follows the rules for deaths in 2026/27, so it does not include pensions.
What assets count in the estate?: Everything you own minus debts: property (main home and second homes), cash and savings, investments (shares, bonds and ISAs - ISAs are in the estate), valuables (jewellery, art, cars), business interests, agricultural land, and life insurance not written in trust. Deductions include mortgages, loans, unpaid bills and reasonable funeral expenses (IHTA 1984 s.172).
When does IHT need to be paid?: IHT must be paid by the end of the sixth month after the death (for a death in January, by 31 July), or HMRC charges interest. Where an IHT400 is needed it is due within 12 months of the death. Tax on land and buildings, and some business assets, can usually be paid in 10 yearly instalments, with interest. You usually need to pay some of the tax before getting probate (GOV.UK Pay your Inheritance Tax bill).