The example in the calculator
A widowed parent dies leaving a £500,000 home to their children and £500,000 of savings and investments. Their late husband or wife left everything to them and used none of their own allowances.
- Nil-rate band: £325,000 of their own + £325,000 transferred from the late spouse = £650,000.
- Residence nil-rate band: £175,000 + £175,000 transferred = £350,000, because the home goes to direct descendants and is worth at least that much.
- Total allowances: £650,000 + £350,000 = £1,000,000.
- Estate: £1,000,000. Nothing is left above the allowances, so the inheritance tax is £0.
The same £1 million in different situations
| Situation | Allowances | Taxable | Inheritance tax |
|---|---|---|---|
| Widowed, home to children | £1,000,000 | £0 | £0 |
| Widowed, home not to direct descendants | £650,000 | £350,000 | £140,000 |
| Single, home to children | £500,000 | £500,000 | £200,000 |
| Single, home not to direct descendants | £325,000 | £675,000 | £270,000 |
All at 40%. “Direct descendants” means children, step-children, adopted or foster children, grandchildren and their spouses.
Nearby estate sizes (single person, home to children)
| Estate | Inheritance tax | Effective rate |
|---|---|---|
| £500,000 | £0 | 0.0% |
| £750,000 | £100,000 | 13.3% |
| £1,000,000 | £200,000 | 20.0% |
| £1,250,000 | £300,000 | 24.0% |
| £1,500,000 | £400,000 | 26.7% |
Married and the first to die?
Anything you leave to your husband, wife or civil partner is free of inheritance tax, so the first death usually costs nothing. Your unused allowances are kept safe and pass to them. Choose “Married” in the calculator and you will see this.
Things that can change the answer
- Pensions from 6 April 2027. Most unused pension pots will count as part of the estate. A pension can turn a £0 bill into a real one.
- Gifts in the last seven years use up the £325,000 band first.
- Estates over £2 million start to lose the residence band.
- The bands are frozen until April 2031, so rising house prices pull more estates over the line each year.
When is the tax paid?
Inheritance tax is normally due by the end of the sixth month after the death. Interest is charged after that. Tax on land and property can usually be paid in ten yearly instalments, which helps when most of the estate is a house. Banks can often release money straight from the deceased’s accounts to HMRC, so the family does not have to find the cash first. If the estate owes nothing, the executors still need to report its value, but the forms are simpler.
FAQ
Is there inheritance tax on a £1 million estate?
Not for a widow or widower whose late spouse used none of their allowances and who leaves the home (worth at least £350,000) to their children: £650,000 + £350,000 = £1,000,000 of allowances, so £0 tax.
What does a single person pay on £1 million?
If the home goes to children, the allowances are £500,000, so £500,000 is taxed at 40% = £200,000.
What if the home does not go to children or grandchildren?
The residence band is lost. A widowed person would then have £650,000 of allowances and pay £140,000 on £1 million.
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.