General

For 2026/27, the standard Inheritance Tax nil rate band is £325,000. An additional residence nil rate band of up to £175,000 may apply when a qualifying home is left to direct descendants, subject to the rules. This can give an individual a combined threshold of up to £500,000. The residence nil rate band is reduced for estates worth more than £2 million.

The annual Inheritance Tax gift exemption is £3,000 in 2026/27. This is the total annual exemption, which can be used for gifts to one person or split between several people.

Unused annual gift exemption can be carried forward from the previous tax year for one year only. The current year's exemption must be used first.

Unlimited gifts can also be made in the form of Potentially Exempt Transfers (PETs). Provided you live for 7 years after making the gift, it will be free of inheritance tax.

Please ensure that, should a gift be made by cheque, sufficient time is given for the cheque to clear before 5th April; otherwise it will not be included in the current year’s total.

Gifts of £250 can be made to any number of separate individuals without giving rise to an inheritance tax charge. Gifts of varying amounts can also be made between family members on the occasion of a wedding/civil partnership ceremony, without any inheritance tax liability.