What is the inheritance tax threshold in the UK?
Answered 11 March 2026
Here is a comprehensive answer on the UK Inheritance Tax threshold:
What the law says
The basic nil-rate band (NRB) — £325,000
The current IHT rate table in Schedule 1 to the Inheritance Tax Act 1984 (IHTA 1984) provides for a nil rate of tax on the portion of value up to £325,000, and a rate of 40% on the portion exceeding that amount. This threshold has been frozen since the 2009-10 tax year.
Freeze extended to 2029-30
Parliament has legislated to prevent indexation of the nil-rate band from applying through to the 2029-30 tax year. Section 86 of the Finance Act 2021 (as amended) disapplies the indexation provisions in IHTA 1984 s.8 for each September CPI comparison from 2020 through to 2028.
Residence Nil-Rate Band (RNRB) — up to £175,000 additional
For deaths on or after 6 April 2017, IHTA 1984 s.8D provides an additional nil-rate band (the "residence nil-rate amount") where a qualifying residential interest is "closely inherited" by descendants. The "residential enhancement" (the maximum RNRB per individual) is set at £175,000 for 2020-21 and subsequent tax years. The RNRB begins to taper away where the estate exceeds £2,000,000, reducing by £1 for every £2 above that threshold.
Transferable Nil-Rate Band (TNRB)
Under IHTA 1984 ss.8A–8C, any unused NRB from a deceased spouse or civil partner can be transferred to the survivor's estate, potentially doubling the NRB to £650,000. Similarly, unused RNRB can be transferred, potentially adding a further £175,000.
HMRC guidance / practice
Standard rate and threshold in practice
HMRC confirms that IHT is charged at 40% on amounts above the nil-rate band threshold (i.e. above £325,000). The same threshold applies to immediately chargeable lifetime transfers, which are taxed at the half death rate of 20%.
Summary of effective thresholds
| Scenario | Effective IHT-free threshold |
|---|---|
| Single individual (no RNRB) | £325,000 |
| Single individual (with full RNRB) | £500,000 |
| Surviving spouse/civil partner (no RNRB) | Up to £650,000 |
| Surviving spouse/civil partner (with full RNRB transferred) | Up to £1,000,000 |
HMRC guidance confirms the NRB is currently £325,000, and that the RNRB is £175,000 for 2020-21 onwards, scheduled to increase with CPI — but note that the freeze legislation has prevented any such increase from applying through to 2029-30.
RNRB conditions (HMRC summary)
HMRC explains that the RNRB is broadly available where the estate includes the deceased's home and it is left to children or other direct descendants ("closely inherited"). It is not an exemption on the home itself but reduces the total IHT charge on death. Unlike the TNRB, it cannot be used against lifetime transfers.
Reduced rate for charitable giving
HMRC also notes that where at least 10% of the net estate is left to charity, a reduced IHT rate of 36% (rather than 40%) applies to deaths on or after 6 April 2012.
Citation sources
al Interest (IHTM46011) This is a residential property interest that is in the person’s estate at their date of death. There can only ever be one qualifying residential interest for an estate. If the estate includes more than one residential property interest, the executors of the estate have to nominate which property they wish to treat as the qualifying residential interest. – abbreviated as QRI Residence nil-rate amount The legislation says that, if the conditions are satisfied, an estate c
For events occurring on or after 15 March 1988 tax is charged at 40% on amounts above the threshold (i.e. the upper limit of the nil rate band). The same threshold applies for immediately chargeable transfers (IHTM14531) taxed at half death rates (20%). Prior to 15 March 1988 Inheritance Tax and, before 18 March 1986 its predecessor Capital Transfer Tax, was charged at a graduated scale of rates. Details of the relevant thresholds that have applied since 18 March 1986 can be found on GOV.UK. The
FA(No2)2015 (as amended by Sch15, FA2016) introduced an additional nil-rate band, known as the ‘residence nil-rate band’ (RNRB), available on deaths on or after 6 April 2017. Broadly, RNRB will be available if a person’s estate includes their home (IHTM46031) and this is left to their children or other direct descendants. The legislation refers to property being ‘closely inherited’ (IHTM46013). The amount of RNRB available is limited to the value of the home that is left to the direct descendant
Part 6 Inheritance tax Future rates and bands Rates and rate bands for 2008-09 and 2009-10 155 1 For the Table in Schedule 1 to IHTA 1984 (rates and rate bands), as it has effect in relation to chargeable transfers made on or after 6th April 2008, there shall be successively substituted— a the 2008-09 Table, which shall apply to any chargeable transfer made on or after 6th April 2008 (but before 6th April 2009), and b the 2009-10 Table, which shall apply to any chargeable transfer made on or aft
PART 3 Other taxes Inheritance tax Rate bands etc for tax years 2021-22 to 2029-30 86 Sections 8 and 8D(7) of IHTA 1984 (indexation of rate bands, residential enhancement and taper threshold) do not have effect by virtue of any difference between— a the consumer prices index for the month of September in 2020, 2021, 2022, 2023 , 2024, 2025 , 2026, 2027 or 2028 , and b that index for the previous September.
Transferable nil rate band (TNRB) was introduced in the Finance Act 2008. The legislation relating to the transfer of unused nil rate band between spouses and civil partners is at IHTA84/S8A-C. The effect of TNRB is that when a surviving spouse or civil partner dies, the nil rate band in place at their death will be increased by the proportion of the nil rate band that was not used on the earlier death of their spouse or civil partner. TNRB may be claimed where the surviving spouse or civil p
PART 2 Inheritance tax Rate bands Increased nil-rate band where home inherited by descendants 9 1 IHTA 1984 is amended as follows. 2 In section 7(1) (rates at which inheritance tax charged on the value transferred by a chargeable transfer) after “Subject to subsections (2), (4) and (5) below and to” insert “ section 8D and ” . 3 In section 8A(2) (test for whether person has unused nil-rate band on death), in the definition of M (maximum amount transferable at 0%), after “were sufficient but” ins
Part 3 Other taxes Inheritance tax Rate bands etc for tax years 2028-29 and 2029-30 57 In section 86 of FA 2021 (no indexation of rate bands, residential enhancement and taper threshold for tax years up to 2027-28)— a for “or 2026” substitute “, 2026, 2027 or 2028” , and b in the heading, for “2027-28” substitute “2029-30” .
The Inheritance Tax nil-rate band at the date Ranjit died is £325,000. There is no unused nil-rate band to add to this so the available nil-rate band is £325,000.