Is Your Estate Heading for an Unexpected Inheritance Tax Bill?
Quick Answers
What is the inheritance tax threshold in 2026?
The nil-rate band remains frozen at £325,000. If you own a home and are leaving it to children or grandchildren, you may also qualify for the residence nil-rate band of £175,000, giving a potential individual threshold of £500,000. Married couples and civil partners can combine allowances, potentially passing on up to £1 million IHT-free in the right circumstances.
What rate is inheritance tax charged at?
IHT is charged at 40% on the value of your estate above your available threshold. This reduces to 36% if you leave at least 10% of your net estate to a registered charity.
When will pensions be subject to inheritance tax?
From April 2027, unspent defined contribution pension pots will be included in a deceased person’s estate for IHT purposes. This is a significant change for anyone using a pension as a legacy planning tool.