What is the inheritance tax threshold in 2025?

The standard nil-rate band is £325,000 per person. With the residence nil-rate band (£175,000 when a home is left to direct descendants), a single person can pass up to £500,000 tax-free. Married couples can combine unused allowances, giving up to £1,000,000 before IHT is due.

How much is inheritance tax in the UK?

IHT is charged at 40% on the estate value above the tax-free threshold. If you leave at least 10% of your estate to charity, the rate reduces to 36%. The first £325,000 — or up to £500,000 with the residence nil-rate band — is completely tax-free.

Do I pay inheritance tax on property in the UK?

Property is included in your estate for IHT purposes. However, the residence nil-rate band (£175,000) reduces tax when you leave your main home to direct descendants. Widows and widowers can inherit a late spouse's unused allowances, potentially giving up to £1,000,000 tax-free.

How can I reduce my inheritance tax?

Legal ways to reduce IHT include: making gifts (tax-free after 7 years), leaving assets to a spouse (exempt from IHT), donating 10% or more to charity (reduces rate to 36%), maximising the residence nil-rate band, and using pension assets which are generally outside the estate.

UK Inheritance Tax Calculator 2025 | Estate Planning Tool

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Your status determines which allowances apply

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Includes children, grandchildren, step-children — affects residence nil-rate band

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Gifts over 7 years ago are fully exempt

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IHT estimate — 2025/26

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after debts

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above threshold

Estimated inheritance tax —

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Net estate

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Family receives

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📊 Estate breakdown

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Net estate—

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How to reduce your inheritance tax

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You could reduce your bill by up to 40% with proper planning

A specialist will review your situation and show you realistic savings — no obligation, no pressure, no fees for the initial review.

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A specialist will review your estate details and contact you — usually within one working day. Most people in your situation reduce their IHT bill with straightforward planning steps.

What happens next: A qualified estate planning specialist will call you to discuss your options. There is no obligation to proceed and no fees for the initial review.

Important: This is an estimate only. A specialist will review the full facts of your estate and confirm what is realistic for your situation.

Based on current UK HMRC thresholds (2025/26). Estimates only — not financial or legal advice. Actual IHT depends on the full facts of your estate. Always consult a qualified solicitor or financial adviser. Official HMRC guidance →

Nil-rate band

Everyone gets a £325,000 nil-rate band. Married couples can combine unused allowances, giving up to £650,000 before IHT applies.

Residence nil-rate band

An extra £175,000 when you leave your main home to children or grandchildren. Can be doubled for widows and widowers — up to £350,000.

7-year gift rule

Gifts made more than 7 years before death are fully IHT-free. Gifts in years 3–7 benefit from taper relief reducing the tax charge progressively.

Spouse exemption

Transfers between spouses or civil partners are fully exempt from IHT — no limit. The survivor inherits unused nil-rate bands from the deceased.

Inheritance tax threshold UK 2025 — complete guide

The UK inheritance tax (IHT) nil-rate band is £325,000 per person in 2025/26, unchanged since 2009. Everything above this is taxed at 40%. If you own a home and leave it to direct descendants, an additional residence nil-rate band of £175,000 applies — giving a single person a potential £500,000 allowance before any IHT is due.

Married couples and civil partners can combine allowances on the second death, giving up to £1,000,000 before IHT applies. Many estates that initially appear taxable pay no tax once all allowances are correctly applied.

The residence nil-rate band tapers for estates over £2,000,000 — reducing by £1 for every £2 above this threshold. Leaving at least 10% of your estate to charity reduces the IHT rate on the remaining taxable amount from 40% to 36%.

How to reduce inheritance tax legally

Legal strategies include: regular gifts from surplus income (immediately exempt), larger gifts which become tax-free after 7 years, writing life insurance in trust, maximising pension assets (generally outside the estate), charitable giving, and establishing trusts. Professional advice identifies the most effective combination for your specific circumstances.

Inheritance tax FAQs

How much inheritance tax on a £500,000 estate?

If single with no property: NRB is £325,000, tax is 40% × £175,000 = £70,000. If you own property and have children: NRB £325,000 + RNRB £175,000 = £500,000 allowance, so no IHT at all. If widowed with children and property, the combined allowance can reach £1,000,000 — again, no IHT.

Do I pay inheritance tax on a property?

Property forms part of your estate for IHT. However, leaving your main home to direct descendants (children, grandchildren) triggers the residence nil-rate band (£175,000), which can reduce or eliminate IHT. Any outstanding mortgage reduces the property value for IHT purposes.

Do spouses pay inheritance tax?

No. Assets passing between married couples and civil partners are completely exempt from IHT regardless of amount. The surviving spouse also inherits any unused nil-rate band, effectively doubling available allowances on the second death.

How does the 7-year gift rule work?

Gifts made more than 7 years before death are completely IHT-free. Gifts made 3–7 years before death benefit from taper relief: 80% reduction at 3–4 years, 60% at 4–5 years, 40% at 5–6 years, 20% at 6–7 years. The annual exemption (£3,000/year) is immediately exempt regardless of timing.

What is the UK inheritance tax rate?

The standard UK IHT rate is 40% on the estate value above the nil-rate band. If you leave at least 10% of your net estate to charity, the rate on the remaining taxable estate reduces to 36% — potentially saving a significant amount on large estates.

How much inheritance tax will your estate pay?

Inheritance Tax Calculator

📊 Estate breakdown

💡 Tap a scenario to model the saving

Key information

Estate Planning Review

Nil-rate band

Residence nil-rate band

7-year gift rule

Spouse exemption

Inheritance tax threshold UK 2025 — complete guide

How to reduce inheritance tax legally

Inheritance tax FAQs