How much can you inherit before paying Inheritance Tax?

Everyone can pass on £325,000 free of Inheritance Tax — this is the nil-rate band. If you leave your home to your children or grandchildren, you get an extra residence nil-rate band of up to £175,000, taking it to £500,000. A married couple or civil partners can combine their allowances, so a surviving spouse can pass on up to £1 million tax-free. Tax is charged at 40% only on the value above the threshold, and most estates pay none.

What is the 7-year rule on gifts?

Most gifts you make are completely free of Inheritance Tax if you live for 7 years after making them. If you die within 7 years, the gift may count towards your estate, but taper relief reduces the tax on gifts made between 3 and 7 years before death. On top of this you can give away £3,000 a year, small gifts of £250 to any number of people, wedding gifts, and regular gifts out of surplus income — all free of Inheritance Tax straight away.

Do I pay Inheritance Tax on money left by my spouse?

No. Anything you inherit from your husband, wife or civil partner is completely free of Inheritance Tax, however much it is — this is the spouse exemption. Their unused nil-rate bands also pass to you, which is why a surviving spouse can leave up to £1 million tax-free. This does not apply to unmarried partners, who do not get the spouse exemption, so it is worth getting advice if you are not married.

Who pays the Inheritance Tax and when?

The executor or administrator of the estate pays it from the estate, not the people inheriting. It is usually due by the end of the sixth month after the person died, and often has to be paid before probate is granted. Tax on property and some other assets can be paid in yearly instalments over up to 10 years. If no tax is due, most estates still need to report values to HMRC as part of the probate process.

Inheritance Tax: the £325,000 threshold

Q: What is the Inheritance Tax rate?

The standard rate is 40%, and it applies only to the part of an estate above the tax-free threshold — not the whole estate. So an estate of £400,000 with a £325,000 nil-rate band would pay 40% on £75,000, which is £30,000. If you leave at least 10% of the net estate to charity, the rate on the rest drops to 36%. Anything left to a spouse, civil partner or charity is exempt.

The thresholds — £325,000, £500,000, £1 million

Inheritance Tax is only charged on the value of an estate above a tax-free threshold. There are two allowances that build it up:

Allowance	Amount	When it applies
Nil-rate band	£325,000	Everyone — on any assets
Residence nil-rate band	up to £175,000	When you leave your home to children or grandchildren
Both together	up to £500,000	One person leaving a home to direct descendants
A married couple / civil partners	up to £1 million	Unused allowances pass to the survivor

Tax is then charged at 40% on the value above your threshold — not on the whole estate. For example, an estate of £400,000 with a £325,000 nil-rate band pays 40% on the £75,000 over the threshold, which is £30,000. Both thresholds are frozen until 2030, which means more estates will gradually be pulled in as house prices rise.

The reassuring bit Only a small minority of estates pay Inheritance Tax at all. With the nil-rate band, the home allowance and the transfer between spouses, a married couple leaving their home to their children can pass on up to £1 million before any tax is due.

What’s always free — spouses and charity

Some things are completely exempt, no matter the amount:

Anything left to a husband, wife or civil partner is free of Inheritance Tax — and their unused allowances pass to you (this is what creates the £1 million couple’s figure).
Anything left to a registered charity is exempt. And if you leave 10% or more of your net estate to charity, the 40% rate on the rest drops to 36%.
Gifts to UK political parties and some national institutions.

Unmarried partners get no spouse exemption The spouse exemption only applies to married couples and civil partners. If you live with a partner but are not married, anything you leave them is not automatically exempt, and their estate can’t inherit your unused allowances. If this is you, it is well worth getting advice and a proper will.

The 7-year rule — giving money away

You can reduce a future Inheritance Tax bill by giving money away while you’re alive — but timing matters. Most gifts are completely free of Inheritance Tax if you live for 7 years after making them. If you die within 7 years, the gift may count towards your estate, but taper relief reduces the tax the longer ago it was:

Years between gift and death	Tax on the gift
Less than 3 years	40%
3 to 4 years	32%
4 to 5 years	24%
5 to 6 years	16%
6 to 7 years	8%
7 years or more	0% — completely free

On top of the 7-year rule, several gifts are free straight away, every year:

£3,000 a year total (your “annual exemption”) — and you can carry forward one unused year.
Small gifts of £250 to as many different people as you like.
Wedding gifts — up to £5,000 to a child, £2,500 to a grandchild, £1,000 to anyone else.
Regular gifts out of surplus income — if they come from income (not savings) and don’t affect your standard of living.

Who pays it — and when

The people inheriting usually don’t pay the tax themselves — the executor or administrator pays it out of the estate as part of dealing with probate. Key points:

It’s normally due by the end of the sixth month after the person died, and often must be paid before probate is granted.
Tax on a property and some other assets can be spread over up to 10 yearly instalments.
Even when no tax is due, the estate usually still has to report values to HMRC as part of getting probate — see our probate guide.

A change is coming — pensions from April 2027 The government has announced that from 6 April 2027, most unused pension funds and pension death benefits will count as part of the estate for Inheritance Tax. If you’re planning around a pension, get up-to-date advice, as the detailed rules are still being finalised.

Do this now

Roughly value the estate — property, savings, investments and possessions, minus debts. Compare it to the thresholds: £325,000 each, up to £500,000 leaving a home to children, up to £1 million for a couple.

Well under the threshold? There is usually nothing to do but make sure there’s a valid will. Close to or over it? Use the free, government-backed MoneyHelper service and consider a qualified solicitor or accountant for estate planning — the savings can be large.

Not financial or legal advice SortedUK is not a regulated financial adviser, solicitor or tax adviser. This is general information about how Inheritance Tax works. The rules on reliefs, trusts and business or agricultural property are detailed and changing — always confirm your own position on GOV.UK or with a qualified professional before acting.

Source verification

Primary sourceGOV.UK — Inheritance Tax (thresholds, rates, gifts, the residence nil-rate band); MoneyHelper — guide to Inheritance Tax

Specific URLgov.uk/inheritance-tax

Last verified14 June 2026 (thresholds + freeze date web-checked against GOV.UK)

ConfidenceHigh — the £325,000 nil-rate band, £175,000 residence nil-rate band, the £2m taper threshold, the 40% rate (36% for 10%+ to charity), the spouse/charity exemptions and the 7-year gift rule are long-standing and the freeze to 2029/30 is confirmed by GOV.UK. The April 2027 pensions change is announced but the detailed rules are still being finalised.

Key factsNil-rate band £325,000 · residence nil-rate band up to £175,000 (home to descendants) · up to £500,000 per person / £1m per couple · 40% on the excess, 36% if 10%+ to charity · spouse & charity exempt · 7-year rule + taper relief · £3,000 annual / £250 small / wedding / surplus-income gift exemptions · RNRB tapers above a £2m estate · executor pays, due ~6 months after death

ScopeUK-wide. Reliefs for business and agricultural property, trusts and non-domiciled estates are complex and changing — this guide covers the everyday rules only. Not legal or tax advice.

Inheritance Tax — common questions

How much can you inherit before tax?

Everyone can pass on £325,000 tax-free, plus up to £175,000 more if they leave their home to children or grandchildren — so up to £500,000. A married couple can combine allowances and pass on up to £1 million. Tax of 40% applies only above the threshold.

What is the Inheritance Tax rate?

40%, charged only on the part of the estate above the tax-free threshold — not the whole estate. It drops to 36% if you leave at least 10% of the net estate to charity. Anything left to a spouse, civil partner or charity is exempt.

What is the 7-year rule?

Most gifts are free of Inheritance Tax if you live for 7 years after making them. Die within 7 years and the gift may be taxed, but taper relief reduces the rate after 3 years. You can also give £3,000 a year, £250 small gifts, wedding gifts and regular gifts from income, all free straight away.

Do I pay tax on money from my spouse?

No — anything left to a husband, wife or civil partner is completely exempt, and their unused allowances pass to you. Unmarried partners do not get this exemption, so it is worth getting advice and a will.

Who actually pays it?

The executor pays it out of the estate, not the people inheriting. It is usually due by the end of the sixth month after death and often before probate is granted; tax on property can be paid in instalments over up to 10 years.

Sources Inheritance Tax thresholds, rates and gift rules · GOV.UK — Inheritance Tax. The residence nil-rate band and the freeze to 2029/30 · GOV.UK — residence nil rate band. Free impartial guidance · MoneyHelper. SortedUK is not a regulated financial, legal or tax adviser and this is general information — confirm current figures and your own position before acting. Last reviewed: 14 June 2026.

Inheritance Tax: most estates pay none — here’s why.

The thresholds — £325,000, £500,000, £1 million

What’s always free — spouses and charity

The 7-year rule — giving money away

Who pays it — and when

Inheritance Tax — common questions

The biggest mistake isn’t tax. It’s having no will.

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