Inheritance Tax thresholds
Inheritance Tax is charged on the value of an estate above the available allowances. The nil-rate bands are frozen until 2030, and new limits on business and agricultural reliefs apply from 6 April 2026.
Allowances and rate
| Allowance | Value |
|---|---|
| Nil-Rate Band (NRB) | £325,000 |
| Residence Nil-Rate Band (RNRB), if a home passes to direct descendants | £175,000 |
| Maximum combined (single person) | £500,000 |
| Maximum combined (married couple or civil partners, both unused) | £1,000,000 |
| Standard rate | 40% |
| Rate if 10% or more of the estate is left to charity | 36% |
- The RNRB is reduced by £1 for every £2 the estate is worth over £2 million and disappears at £2.35 million.
- The nil-rate bands are frozen until April 2030.
- Unused allowances can generally be transferred to a surviving spouse or civil partner.
Business and agricultural reliefs from 6 April 2026
| Relief | From 6 April 2026 |
|---|---|
| 100% Agricultural Property Relief and Business Property Relief | Applies to the first £1 million of combined qualifying assets |
| Qualifying assets above £1 million | 50% relief (25% effective charge) |
- The £1 million allowance is per person and, from 2031, will increase in line with CPI.
- Assets passing to a spouse or civil partner can use their own £1 million allowance, so a couple may shelter up to £2 million.
Gifts during your lifetime
| Exemption | Amount |
|---|---|
| Annual gift exemption | £3,000 per year |
| Small gifts | Up to £250 to any number of people |
| Wedding gifts | £5,000 to a child, £2,500 to a grandchild, £1,000 to others |
| Gifts in the 7 years before death | May be added back to the estate if over £325,000 (taper on the tax rate after 3 years) |
Common questions
What is the nil-rate band?
£325,000 per person, plus up to £175,000 of residence nil-rate band where a home passes to direct descendants. Both are frozen until 2030.
What is changing for farms and businesses?
From 6 April 2026, 100% Agricultural and Business Property Relief applies only to the first £1 million of combined qualifying assets; qualifying assets above that receive 50% relief.
Figures from Inheritance Tax . For guidance only, not tax advice. Always check current HMRC guidance.
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