Inheritance Tax UK Basics (2026)
Only about 1 in 25 estates in the UK actually pays inheritance tax, yet it is the most-feared tax in the country. This plain-English guide explains how it works in 2026, the allowances you can use, and when it is worth getting professional advice.
IHT at a glance (2026)
- Standard nil-rate band (per person):£325,000
- Residence nil-rate band:up to £175,000 (home to direct descendants)
- Tax rate above threshold:40% (36% if 10%+ left to charity)
- Spouse/civil partner exemption:Unlimited
- Annual gift exemption:£3,000 per person
- Small gift exemption:£250 per person per year
- Gifts >7 years before death:Generally exempt
How inheritance tax works
When you die, the total value of your estate (property, savings, investments, personal belongings, less debts) is worked out. Anything you leave to a UK spouse or civil partner passes IHT-free. Anything left to anyone else is compared against your nil-rate band.
Everyone has a £325,000 standard nil-rate band. If you die leaving your main home to direct descendants (children, grandchildren, step-children, adopted children), you may also qualify for an extra £175,000 residence nil-rate band. Combined, that gives a single person up to £500,000 before tax bites.
If you are married or in a civil partnership, your unused allowance transfers to your surviving spouse. That is why couples can often pass up to £1 million IHT-free. The nil-rate band is frozen until at least April 2028.
The 7-year rule on gifts
Gifts you make to individuals (called Potentially Exempt Transfers) drop out of your estate for IHT purposes if you survive 7 years from the date of the gift. If you die within 7 years, the gift is added back to your estate and may be taxable, though taper relief reduces the tax on gifts made 3 to 7 years before death.
| Years between gift and death | Tax rate on the gift |
|---|---|
| Less than 3 | 40% |
| 3 – 4 | 32% |
| 4 – 5 | 24% |
| 5 – 6 | 16% |
| 6 – 7 | 8% |
| 7+ | 0% (exempt) |
Gifts that are always exempt
- ✓Gifts between UK spouses or civil partners (unlimited)
- ✓The £3,000 annual exemption (per giver, not per recipient)
- ✓Small gifts of £250 per person per year
- ✓Wedding gifts: £5,000 to your child, £2,500 to a grandchild, £1,000 to anyone else
- ✓Gifts out of surplus income (regular, from income, that do not affect your standard of living)
- ✓Gifts to UK-registered charities and political parties
When to get professional advice
Speak to a solicitor or chartered tax adviser if any of the following apply:
- •Your estate is likely to exceed £500,000 (single) or £1 million (couple)
- •You own a business or shares in a private company
- •You have property abroad
- •You want to set up trusts for IHT planning
- •You have significant investments or pension assets
Related reading
- Executor duties UK: a complete checklist
- What happens if you die without a will
- Lasting Power of Attorney guide
Frequently asked questions
What is the inheritance tax threshold in 2026?+
The standard nil-rate band is £325,000 per person. If you leave your home to a direct descendant (children or grandchildren), you may also qualify for the residence nil-rate band of up to £175,000. Combined, a single person can pass up to £500,000 before IHT is charged. A surviving spouse or civil partner can inherit the unused allowance, meaning couples can potentially pass £1 million without IHT.
What is the inheritance tax rate in the UK?+
Inheritance tax is charged at 40% on the value of the estate above the nil-rate band(s). If you leave at least 10% of your estate to charity, the rate on the rest of the chargeable estate reduces to 36%.
Do I pay inheritance tax on gifts made while I was alive?+
Potentially yes, under the 7-year rule. Gifts made to individuals more than 7 years before death are generally exempt. Gifts made within 7 years of death may be chargeable, though taper relief reduces the tax on gifts made between 3 and 7 years before death. Certain gifts are always exempt (spouse transfers, the £3,000 annual exemption, small gifts of £250, gifts from surplus income).
Is my spouse exempt from inheritance tax?+
Yes. Gifts and bequests between spouses or civil partners are generally exempt from IHT (spouse exemption). Unmarried partners do not benefit from this exemption, which is why many couples choose to marry or enter a civil partnership for IHT reasons alone.
Does a DIY will kit help me avoid inheritance tax?+
A DIY will kit from WillSafe UK is designed for straightforward estates. It does not include trusts or bespoke IHT planning. If your estate is likely to exceed the combined nil-rate bands and you want to use trusts, gifts in contemplation of death, or other tax-mitigation structures, you should speak to a qualified solicitor or chartered tax adviser. WillSafe UK is not a firm of solicitors and does not provide tax advice.
Who pays the inheritance tax?+
Inheritance tax is paid by the executor from the estate before assets are distributed to beneficiaries. IHT is due 6 months after the end of the month of death; interest accrues after that. For property, executors can pay IHT in 10 annual instalments. The IHT400 form is used to report and pay IHT in most cases.
Not tax advice. This guide is general informational content for England & Wales as at April 2026. Tax law changes and personal circumstances vary. WillSafe UK is not a firm of solicitors, financial advisers, or tax advisers. For tailored advice, speak to a qualified professional.