Nil Rate Band

The Nil Rate Band and Inheritance Tax

The nil rate band is the threshold below which no inheritance tax (IHT) is charged on your estate when you die. For 2025/26, it is £325,000 and has been frozen at this level since 2009. Anything above this threshold is taxed at 40%.

If you leave your home to your children or grandchildren, an additional residence nil rate band of £175,000 applies, bringing the total threshold to £500,000. Married couples and civil partners can transfer unused allowances, potentially sheltering up to £1,000,000 from IHT.

Inheritance tax planning is complex and benefits from professional advice. Common strategies include making gifts (exempt after 7 years), using trusts, and making charitable donations (which can reduce the IHT rate to 36%). See our inheritance tax calculator.

How Nil Rate Band Works in Practice

The nil-rate band is the threshold below which inheritance tax (IHT) is not charged. The standard nil-rate band is £325,000, and has been frozen at this level since 2009. The residence nil-rate band (RNRB) adds up to £175,000 when passing a home to direct descendants, giving a combined threshold of £500,000 per person or £1,000,000 for married couples/civil partners.

Practical Tips

With rising property prices and a frozen threshold, more estates are being caught by inheritance tax (40% on amounts above the threshold). Married couples and civil partners can transfer unused nil-rate band to the surviving spouse, doubling the effective threshold. Gifts made more than 7 years before death are usually exempt. Regular giving from surplus income is also exempt without any time limit — this is an underused but powerful planning tool.

Related Topics

IHT planning is complex and professional advice is recommended for estates near or above the threshold. See inheritance tax calculator for an estimate of potential IHT liability.