UK Inheritance Tax Burden by Estate Value 2026/27
Original analysis of IHT on estates from £325k to £5m: the nil-rate bands, the RNRB taper above £2m for single people and couples, and April 2027 pensions.
The headline finding
An estate of £1,000,000 left to children, including a home worth at least the available residence nil-rate band (RNRB), faces £200,000 Inheritance Tax for a single person, or £0 on the second death of a married couple whose first-to-die left everything to the survivor and used neither band.
The RNRB reduces by £1 for every £2 the estate is worth more than £2,000,000 (HMRC RNRB guidance). A single person's £175,000 is gone at £2,350,000. A surviving spouse who inherited the first spouse's unused RNRB has £350,000, and the taper applies to that combined figure, so it is gone at £2,700,000 (IHTA 1984 s.8D). Inside the taper zone each extra pound of estate costs 60.0% in tax: 40% on the pound itself plus 40% on the 50p of RNRB it removes.
From 6 April 2027, most unused pension funds and pension death benefits come within the value of a person's estate for Inheritance Tax. HMRC's policy paper of 26 November 2025 estimates that, of around 213,000 estates with inheritable pension wealth in 2027-28, 10,500 will have an Inheritance Tax liability where previously they would not and around 38,500 will pay more (HMRC policy paper).
Key thresholds for 2026/27
| Allowance | 2026/27 value | Status |
|---|---|---|
| Nil-Rate Band (NRB) | £325,000 | Unchanged since 6 April 2009; maintained to April 2031 |
| Residence Nil-Rate Band (RNRB) | £175,000 | Unchanged since 6 April 2020; maintained to April 2031 |
| RNRB taper threshold | £2,000,000 | Set at £2m since 2017-18 (IHTA 1984 s.8D) |
| RNRB fully tapered: single | £2,350,000 | Derived |
| RNRB fully tapered: with transferred RNRB | £2,700,000 | Derived |
| IHT rate | 40.0% | — |
| Reduced IHT rate (10% or more of net estate to charity) | 36.0% | — |
Dates: HMRC's thresholds table; Budget 2025 maintains the nil-rate band and residence nil-rate band "for a further year, from April 2030 until April 2031" (Budget 2025).
IHT burden by estate value: single vs married couple
Single person: NRB £325,000 plus RNRB up to £175,000, a maximum of £500,000. Surviving spouse or civil partner: their own bands plus the unused bands transferred from the first death, a maximum of £1,000,000. The RNRB columns show what survives the taper.
| Estate value | RNRB (single) | Single IHT | Single effective % | RNRB (couple) | Married IHT | Married effective % |
|---|---|---|---|---|---|---|
| £325,000 | £175,000 | £0 | 0.0% | £350,000 | £0 | 0.0% |
| £500,000 | £175,000 | £0 | 0.0% | £350,000 | £0 | 0.0% |
| £750,000 | £175,000 | £100,000 | 13.3% | £350,000 | £0 | 0.0% |
| £1,000,000 | £175,000 | £200,000 | 20.0% | £350,000 | £0 | 0.0% |
| £1,250,000 | £175,000 | £300,000 | 24.0% | £350,000 | £100,000 | 8.0% |
| £1,500,000 | £175,000 | £400,000 | 26.7% | £350,000 | £200,000 | 13.3% |
| £2,000,000 | £175,000 | £600,000 | 30.0% | £350,000 | £400,000 | 20.0% |
| £2,350,000 | £0 | £810,000 | 34.5% | £175,000 | £610,000 | 26.0% |
| £2,500,000 | £0 | £870,000 | 34.8% | £100,000 | £700,000 | 28.0% |
| £2,700,000 | £0 | £950,000 | 35.2% | £0 | £820,000 | 30.4% |
| £3,000,000 | £0 | £1,070,000 | 35.7% | £0 | £940,000 | 31.3% |
| £4,000,000 | £0 | £1,470,000 | 36.8% | £0 | £1,340,000 | 33.5% |
| £5,000,000 | £0 | £1,870,000 | 37.4% | £0 | £1,740,000 | 34.8% |
The RNRB taper zone explained
For a single person, between £2,000,000 and £2,350,000 each £2 of additional estate removes £1 of RNRB:
- 40% IHT on the additional £1 of estate
- + 40% IHT on the 50p of RNRB that £1 removes (20p)
- = 60.0% marginal rate
Across the whole zone, moving from a £2,000,000 estate to a £2,350,000 estate adds £350,000 of value and £210,000 of IHT (40% of the extra £350,000 plus 40% of the £175,000 RNRB lost), so the family keeps £140,000 of the extra £350,000. For a surviving spouse with a transferred RNRB the same rate applies over the wider zone to £2,700,000.
The value used for the taper is the whole estate less debts, before exemptions such as the spouse exemption and before reliefs such as business or agricultural property relief (HMRC RNRB guidance).
April 2027: unused pension funds enter the estate
From 6 April 2027 most unused pension funds and pension death benefits are brought within the value of a person's estate for Inheritance Tax, and personal representatives become liable for reporting and paying the tax. Death in service benefits from a registered pension scheme, and dependants' scheme pensions from a defined benefit or collective money purchase arrangement, are excluded. Death benefits passing to a surviving spouse or civil partner, or to a charity, keep their existing exemptions. HMRC says the measure removes distortions that have led to pensions being used as a vehicle for wealth transfer.
HMRC's policy paper of 26 November 2025 sets out:
- Exchequer impact of +£710m in 2027-28, +£1,485m in 2028-29 and +£1,600m in 2029-30 (figures from Budget 2025 Table 4.2, certified by the Office for Budget Responsibility)
- Of around 213,000 estates with inheritable pension wealth in 2027-28, 10,500 will have an Inheritance Tax liability where previously they would not
- Around 38,500 estates will pay more Inheritance Tax than before, with the average liability rising by around £34,000
The change matters most near the RNRB taper. The taper is measured on the value of the person's estate immediately before death (IHTA 1984 s.8D), and the policy paper describes pension funds as coming within that value. So a retiree with £1.5m of other assets and a £700,000 unused pension would have an estate of £2.2m from April 2027 rather than £1.5m, inside the single-person taper zone.
Source: HMRC - Inheritance Tax: unused pension funds and death benefits (published 26 November 2025). The table above uses 2026/27 rules and does not include pensions.
Estate planning interactions worth noting
- Charity: if 10% or more of the net value of the estate is left to charity, the estate can pay IHT at 36.0% rather than 40.0% on some assets (GOV.UK). The rate difference is worth £4,000 per £100,000 charged at the reduced rate.
- Lifetime gifts: the £3,000 annual exemption takes gifts out of the estate straight away. Other gifts to individuals may be taxed if the giver dies within 7 years; gifts made 3 to 7 years before death get taper relief, but only where the gifts in the 7 years before death total more than the £325,000 threshold (GOV.UK gifts rules).
- Business and agricultural property relief: from 6 April 2026 a £2.5 million allowance applies to the combined value of property qualifying for 100% business or agricultural property relief; relief above it is 50%, and any unused allowance can pass to a surviving spouse or civil partner. Shares admitted to trading on recognised stock exchanges designated as "not listed" get 50% in all circumstances (HMRC policy paper).
- Spouse exemption: transfers between spouses and civil partners are exempt without limit, except where the giver is a long-term UK resident and the recipient is not; then the exemption is capped at the nil-rate band amount (IHTA 1984 s.18).
- Trusts: a transfer into most trusts is charged at 20% on the amount above the threshold, after counting the settlor's chargeable gifts in the previous 7 years, and IHT can also be due on exits and at each 10-year anniversary (HMRC trusts and IHT).
Quotable findings for media use
- For 2026/27, the IHT allowances are a £325,000 nil-rate band plus a £175,000 residence nil-rate band: up to £500,000 per person, or £1,000,000 for a surviving spouse who inherits both unused bands. Budget 2025 maintains both bands until April 2031.
- The RNRB taper makes the marginal IHT rate 60.0% between £2,000,000 and £2,350,000 for a single person, and up to £2,700,000 for a surviving spouse with a transferred RNRB.
- A surviving spouse's estate of £2,350,000 pays £610,000 and one of £2,500,000 pays £700,000, because the combined £350,000 RNRB tapers as one amount.
- From 6 April 2027 most unused pension funds come into the estate. HMRC estimates 10,500 estates in 2027-28 will newly have an IHT liability and around 38,500 will pay more, raising +£710m in 2027-28 and +£1,600m by 2029-30.
- An estate of £1,000,000 with a qualifying home left to direct descendants pays £200,000 IHT for a single person or £0 for a surviving spouse with both bands transferred.
- The £325,000 nil-rate band has not changed since 6 April 2009. Uprated by annual-average CPI from 2009 to 2025 (ONS series D7BT), it would be about £519,000.
Methodology
Every figure is computed by the same function as the Inheritance Tax calculator: estate value minus (NRB + RNRB after taper) = taxable estate, taxed at 40.0%. The RNRB assumes the home passes to direct descendants and is worth at least the available RNRB; where it is worth less, the RNRB is limited to its value. No lifetime gifts, charity legacies or reliefs are included.
The married-couple column is the second death where the first spouse left everything to the survivor, so 100% of both bands transfers: up to £1,000,000 in total. The taper then applies to the combined £350,000 RNRB, at £1 for every £2 over £2,000,000 (IHTA 1984 s.8D). If the first spouse's own estate was over £2,000,000, less RNRB is available to transfer.
Full data provenance at salarytax.uk/methodology; primary sources are listed below.
About this report
Original data report produced by salarytax.uk and republishable in part or whole with attribution to salarytax.uk. Specific calculator + guide permalinks:
- UK Inheritance Tax calculator
- IHT 7-year gift taper calculator
- Married-couple IHT calculator
- Residence Nil-Rate Band calculator
- April 2027 pension IHT deep dive
- BPR + APR April 2026 changes
Companion reports:
Press contact and full quotable assertions at salarytax.uk/press.