Inheritance tax allowances for 2026/27
| Item | Figure |
|---|---|
| Nil-rate band | £325,000 (frozen to 5 April 2031) |
| Residence nil-rate band | £175,000 when the home goes to direct descendants (frozen to 5 April 2031) |
| RNRB taper | £1 lost for every £2 the estate exceeds £2,000,000 (gone at £2.35m single, £2.7m with a transferred band) |
| Rate | 40% on the taxable amount; 36% if at least 10% of the baseline goes to charity |
| Spouse / civil partner | Unlimited exemption; unused % of both bands transfers to the survivor |
| Unused pensions | Inside the estate for deaths on or after 6 April 2027 |
| 100% business & agricultural relief | First £2.5m of qualifying assets (50% relief above), from 6 April 2026 |
How the calculator works
It adds your home, other assets and (for deaths from 6 April 2027) unused pensions. Gifts made in the seven years before death use up the £325,000 nil-rate band first. The residence nil-rate band is capped at the value of the home passing to direct descendants and tapered once the estate is over £2m. Anything left to charity is exempt; if it is at least 10% of the estate after the nil-rate band (the “baseline”, worked out without deducting the residence band), the rest is taxed at 36%.
Pensions from April 2027
The Finance Act 2026 brings most unused pension funds and death benefits into the estate. Pension scheme administrators can pay the tax, and personal representatives remain responsible for reporting it. Death-in-service benefits and dependants’ scheme pensions are excluded, and pensions left to a spouse or civil partner remain exempt.
FAQ
How much inheritance tax on a £900,000 estate?
For a single person leaving a £450,000 home to their children, the allowances are £325,000 + £175,000 = £500,000, so £400,000 is taxed at 40% = £160,000.
How much can I leave tax-free in 2026/27?
Up to £500,000 on your own (£325,000 plus £175,000 if your home goes to your children or grandchildren), and up to £1,000,000 for a married couple or civil partners. The bands are frozen until April 2031.
Will my pension be subject to inheritance tax?
Yes, for deaths on or after 6 April 2027, most unused pension pots count as part of the estate. In the default example, adding a £200,000 pension raises the bill from £80,000 to £160,000.
Does leaving money to charity reduce inheritance tax?
Charity gifts are exempt, and if they are at least 10% of the baseline the rate falls from 40% to 36%. On a £900,000 estate a £57,500 charity gift cuts the tax from £160,000 to £123,300.
Sources: GOV.UK policy paper “Inheritance Tax thresholds” (26 Nov 2025) — gov.uk/government/publications/inheritance-tax-thresholds; GOV.UK “Inheritance Tax on pensions: liability, reporting and payment”; GOV.UK press release “Inheritance tax reliefs threshold to rise to £2.5m” (Dec 2025); Inheritance Tax Act 1984 Sch 1A (36% rate). Autumn Budget 28 Oct 2026: no change to the thresholds (HCR Law overview, 30 Oct 2026). Checked 5 November 2026.