Planning

Inheritance Tax Thresholds (2025/26)

Published on January 12, 2026

Inheritance Tax (IHT) is a tax on the estate (the property, money and possessions) of someone who’s died.

The Nil Rate Band

There is normally no Inheritance Tax to pay if either:

  • The value of your estate is below the £325,000 threshold.
  • You leave everything above the £325,000 threshold to your spouse, civil partner, a charity, or a community amateur sports club.

Residence Nil Rate Band

If you give away your home to your children (including adopted, foster or stepchildren) or grandchildren your threshold can increase to £500,000.

The Rate

The standard Inheritance Tax rate is 40%. It’s only charged on the part of your estate that’s above the threshold.

Example: Your estate is worth £500,000 and your tax-free threshold is £325,000. The Inheritance Tax charged will be 40% of £175,000 (£500,000 minus £325,000).

Reduced Rate

The estate can pay Inheritance Tax at a reduced rate of 36% on some assets if you leave 10% or more of the 'net value' to charity in your will.