Inheritance Tax

Inheritance tax rates and thresholds	2026/27	2025/26	2024/25
Rate (for estates)	40%	40%	40%
Reduced rate (for estates leaving 10% or more to charity)	36%	36%	36%
Rate (for chargeable lifetime transfers)	20%	20%	20%
Nil-rate band limit	£325,000	£325,000	£325,000
Residence nil-rate band limit	£175,000	£175,000	£175,000
Residence nil-rate band threshold for start of tapered withdrawal	£2,000,000	£2,000,000	£2,000,000
100% of agricultural property relief and business property relief allowance	£1,000,000	N/A	N/A

Lifetime exemption for gifts of non-business assets	2026/27	2025/26	2024/25
Annual exemption per year (unused exemptions can be carried forward one year)	£3,000	£3,000	£3,000
Small gift exemption per person	£250	£250	£250
Gifts on marriage or civil partnership by parent	£5,000	£5,000	£5,000
Gifts on marriage or civil partnership by grandparent	£2,500	£2,500	£2,500
Gifts on marriage or civil partnership by others	£1,000	£1,000	£1,000

Relief on gifts made within seven years of death by years before death	2026/27	2025/26	2024/25
0 - 3 years	0%	0%	0%
3 - 4 years	20%	20%	20%
4 - 5 years	40%	40%	40%
5 - 6 years	60%	60%	60%
6 - 7 years	80%	80%	80%

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