How do I know if my estate will pay inheritance tax?

If your net estate is below £325,000, or you leave everything to a spouse or charity, generally no tax is due. Above your available allowances (up to £500,000 individually with a home left to descendants), the excess is taxed at 40%.

What is the inheritance tax rate?

40% on the value above your available thresholds, reduced to 36% if you leave at least 10% of your net estate to charity.

Will my estate pay inheritance tax? (decision tree)

England & Wales · Decision tree · Download PDF

How to use this

Work through the questions using current (2026) thresholds to see whether inheritance tax is likely. This is a guide only — take advice for an accurate assessment.

Work through the tree

Step 1

Is your net estate (after debts) above £325,000?

NoNo inheritance tax.Your estate is within the £325,000 nil-rate band, so no inheritance tax is due.

YesGo to step 2 ↓

Step 2

Are you leaving everything to your spouse/civil partner, or to charity?

YesGenerally no inheritance tax.Gifts to a spouse, civil partner or charity are exempt. Their unused nil-rate band may also transfer to a survivor.

NoGo to step 3 ↓

Step 3

Are you leaving a qualifying home to your children or grandchildren?

YesAdd the residence band — then check the total.You may add up to £175,000, giving up to £500,000 for an individual or £1m for a couple. Compare this to your estate value at step 4.

NoGo to step 4 ↓

Step 4

Is your estate above your total available allowances?

YesInheritance tax is likely due.The excess is taxed at 40% (reduced to 36% if you leave 10%+ of your net estate to charity). Note: from 6 April 2027 most unused pensions also count.

NoNo inheritance tax.Your allowances cover the estate, so no inheritance tax is due.

Possible outcomes at a glance

Under £325,000: no inheritance tax.
All to spouse/charity: generally exempt.
Home to descendants: up to £500,000 (individual) or £1m (couple) tax-free.
Above allowances: 40% on the excess — 36% if 10%+ goes to charity.
Thresholds are frozen to April 2031; from April 2027 most unused pension funds fall within inheritance tax.

Sources

Inheritance Tax Act 1984 — legislation.gov.uk
GOV.UK — Inheritance Tax thresholds and rates (NRB £325,000; RNRB £175,000)
HMRC — Inheritance Tax on pensions: technical note (from 6 April 2027)

Reviewed by: ClearLegacy editorial team
Last reviewed: June 2026
Next review: December 2026
Jurisdiction: England & Wales

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Will my estate pay inheritance tax? (decision tree)

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Possible outcomes at a glance

Sources

Related answers & scenarios

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