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    Tax & Rules

    Inheritance Tax Allowance UK Explained

    UK Inheritance Tax allowances are simpler than they look — once you separate the standard nil-rate band, the residence nil-rate band, and the rules for couples. This guide explains each layer, with current 2025 figures.

    Reviewed for accuracy and UK relevance by the Inheritance Money Advice editorial team· Last reviewed May 2026

    Quick answer

    How do UK Inheritance Tax allowances stack?

    1. 1

      Start with the £325,000 nil-rate band per person.

    2. 2

      Add up to £175,000 residence nil-rate band if a home passes to children or grandchildren.

    3. 3

      Transfer any unused allowance from a deceased spouse or civil partner.

    4. 4

      Subtract the taper if the estate exceeds £2 million (£1 lost for every £2 above).

    5. 5

      Apply 40% Inheritance Tax to anything remaining above the available allowance.

    The standard nil-rate band

    Every UK individual has a nil-rate band of £325,000. The estate pays no Inheritance Tax on value up to that figure. Above it, the standard rate is 40% — reduced to 36% where at least 10% of the estate is left to charity.

    The residence nil-rate band (RNRB)

    An additional £175,000 allowance applies when a main home is left to direct descendants — children, stepchildren, adopted children or grandchildren. The RNRB is only available where the estate includes a qualifying residence at death.

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    Transferring unused allowance between spouses

    When the first partner dies, any unused nil-rate band and RNRB transfer to the surviving spouse or civil partner. This is why a couple can often pass on up to £1 million tax-free.

    The £2 million taper

    For estates above £2 million, the RNRB tapers by £1 for every £2 of excess. Above roughly £2.35 million, the RNRB disappears entirely — though the £325,000 band remains.

    Where to read next

    Allowances are only the start. To turn this into a plan, see our guide on how to reduce Inheritance Tax legally and the 7-year gifting rule. The full framework lives in our complete guide on what to do with an inheritance.

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