What are the UK IHT thresholds in 2026?

£325,000 standard nil-rate band, plus £175,000 residence nil-rate band when the main home passes to a direct descendant. Married couples and civil partners can combine and transfer allowances up to £1,000,000 in total. Both thresholds are frozen until April 2030.

How do married couples reach £1m?

£325,000 NRB + £325,000 transferred NRB from deceased spouse + £175,000 RNRB + £175,000 transferred RNRB = £1,000,000. Both allowances must be claimed on the second death — HMRC does not apply them automatically.

Does the residence nil-rate band always apply?

Only if the main home (or a share of it) passes directly to a child, grandchild, stepchild or great-grandchild. It does not apply if the home is left to siblings, friends, an unmarried partner, or to children via a discretionary trust. It also tapers away for estates above £2m at £1 per £2 over the threshold.

What is the IHT rate?

40% on the value of the estate above the available nil-rate bands. The rate drops to 36% when at least 10% of the net estate is left to qualifying UK charity.

What happens above £2m?

The residence nil-rate band tapers by £1 for every £2 the estate exceeds £2m. An estate of £2.35m loses the £175,000 RNRB entirely. A married couple's RNRB phases out completely at £2.7m of joint estate value.

Are pensions inside the estate?

Currently most defined contribution pensions are paid by trustee discretion and sit outside the estate for IHT. From April 2027 the government plans to bring unused pension funds into the IHT net — proposed but not yet enacted.

How are gifts treated?

Gifts in the seven years before death are added back to the estate. Gifts within three years are taxed at 40%; gifts 3-7 years before death attract taper relief reducing the rate to 32%, 24%, 16% and 8%. The £3,000 annual gift exemption is separate.

Home · Visual Guides · IHT Thresholds

Visual Guide · 2026/27 HMRC thresholds · UK-wide

UK Inheritance Tax Thresholds — Visual Diagram

The UK IHT system is built from layers — a base nil-rate band, a property-only top-up, and a transferable second layer for married couples. The diagram below stacks them visually so you can see exactly where the £1,000,000 figure for couples comes from and where the cliff edge at £2m sits.

Written by: SL · Reviewed by: SL · Last updated: May 2026

Quick Answer

An individual gets £325,000 nil-rate band, plus £175,000 residence nil-rate band when the home passes to direct descendants — £500,000 total. Married couples and civil partners can transfer unused allowances on second death, taking the maximum to £1,000,000. Above the allowances, IHT is 40% (or 36% with 10%+ to charity). The residence band tapers above £2m and vanishes by £2.35m.

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Single person

£500,000

£325k NRB + £175k RNRB

Married couple

£1,000,000

Both bands × 2 (transferred)

IHT rate

40%

36% with 10%+ to charity

RNRB taper starts

£2m

Lost entirely at £2.35m / £2.7m couple

Nil-rate band (£325,000)

Residence nil-rate band (£175,000)

Transferred NRB (spouse)

Transferred RNRB (spouse)

Taxable at 40%

Charity exemption / 36% band

The four building blocks

1. Nil-rate band — £325,000

The base allowance. Every UK estate gets it. It has been £325,000 since 6 April 2009 and is frozen until at least 5 April 2030. That 21-year freeze is the biggest single driver of rising IHT receipts.

2. Residence nil-rate band — £175,000

An extra allowance, available only when the deceased's main residence (or its sale proceeds) passes to a direct descendant — child, stepchild, adopted child, foster child, grandchild or great-grandchild. The amount available is capped at the lower of £175,000 or the home's value.

3. Transferable allowances — for spouses and civil partners only

When the first spouse dies, any unused portion of their NRB and RNRB transfers to the survivor. On second death, the survivor's estate can use up to two NRBs (£650,000) and two RNRBs (£350,000) — the famous £1m figure. The transfer must be claimed within two years of death using form IHT402 (NRB) and IHT436 (RNRB).

4. The £2m taper cliff

The RNRB tapers at £1 for every £2 the estate exceeds £2,000,000. A single estate of £2.35m loses the entire £175,000 RNRB. A married couple's combined RNRB is fully tapered by £2.7m. This is why estate planning for high-value estates focuses on getting the estate below £2m at second death.

The 36% charity rate explained: if you leave at least 10% of your net estate (the part above the nil-rate bands) to a qualifying UK charity, IHT on the rest drops from 40% to 36%. For estates above £1m, the net cost of the charity gift is often less than the tax saved on the remainder.

Worked example: married couple, £1.2m estate

Mr A dies in 2020 leaving everything to Mrs A — spousal exemption, no IHT, no allowances used. Mrs A dies in 2026 with a £1.2m estate including a £500,000 home passing to their two children.

Mrs A's own NRB: £325,000
Mr A's unused NRB transferred: £325,000
Mrs A's own RNRB: £175,000
Mr A's unused RNRB transferred: £175,000
Total allowances: £1,000,000
Taxable estate: £200,000
IHT at 40%: £80,000

Why the £1m figure is misleading

The £1m maximum only applies if all four allowances are fully available, the home is worth at least £350,000, the estate is below £2m, and the home passes to direct descendants. Many estates miss one or more of these criteria — and the headline "£1m IHT-free" doesn't apply.

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Frequently asked questions

What are the UK IHT thresholds in 2026?: £325,000 standard nil-rate band, plus £175,000 residence nil-rate band when the main home passes to a direct descendant. Married couples and civil partners can combine and transfer allowances up to £1,000,000 in total. Both thresholds are frozen until April 2030.
How do married couples reach £1m?: £325,000 NRB + £325,000 transferred NRB from deceased spouse + £175,000 RNRB + £175,000 transferred RNRB = £1,000,000. Both must be claimed on the second death — HMRC does not apply them automatically.
Does the residence nil-rate band always apply?: Only if the main home (or a share of it) passes directly to a child, grandchild, stepchild or great-grandchild. It does not apply if the home is left to siblings, friends or an unmarried partner. It also tapers away above £2m.
What is the IHT rate?: 40% on the value of the estate above the available nil-rate bands. The rate drops to 36% when at least 10% of the net estate is left to a qualifying UK charity.
What happens above £2m?: The residence nil-rate band tapers by £1 for every £2 the estate exceeds £2m. An estate of £2.35m loses the £175,000 RNRB entirely. A married couple's RNRB phases out completely at £2.7m of joint estate value.
Are pensions inside the estate?: Currently most defined contribution pensions are paid by trustee discretion and sit outside the estate for IHT. From April 2027 the government plans to bring unused pension funds into the IHT net — proposed but not yet enacted.
How are gifts treated?: Gifts in the seven years before death are added back to the estate. Gifts within three years are taxed at 40%; gifts 3-7 years before death attract taper relief reducing the rate to 32%, 24%, 16% and 8%. The £3,000 annual gift exemption is separate.
Does the diagram apply across the whole UK?: Yes. IHT is a UK-wide tax administered by HMRC, so the thresholds and rates are identical in England, Wales, Scotland and Northern Ireland. Probate and intestacy procedures differ across the four nations, but the IHT calculation does not.

Related guides

Sources & references
HMRC — Inheritance Tax rates and allowances · gov.uk/inheritance-tax
HMRC — Residence nil-rate band guidance · gov.uk/guidance/inheritance-tax-residence-nil-rate-band
HMRC — Transferring unused IHT allowance (IHT402) · gov.uk/inheritance-tax/passing-on-home
HMRC — Reduced rate for charitable gifts · gov.uk/inheritance-tax/reduced-rate
HMRC — Annual IHT statistics · gov.uk/government/statistics/inheritance-tax-statistics
Inheritance Tax Act 1984 · legislation.gov.uk
Last reviewed: 31 May 2026 by SL. Educational guide only — not tax advice.