| Nil-rate band | £325,000, the same for 2026/27 and 2027/28 |
| Residence nil-rate band | £175,000 if the home goes to children or grandchildren; together up to £500,000 |
| Rate | 40% on the part above the nil-rate band, 36% with at least 10% to charity |
| Spouses | tax-free; capped at £325,000 if only the deceased was a long-term UK resident |
| Worldwide estate covered | for anyone UK resident in 10 of the last 20 tax years (since 6 April 2025, replacing domicile) |
| After leaving | still caught for 3 to 10 tax years, depending on length of stay |
| Everyone else | UK assets only, such as UK property and accounts |
| Due | end of the sixth month after death |
| Pensions | mostly part of the estate from 6 April 2027 |
| Updated | November 2026 |
How UK inheritance tax works
The UK taxes the estate as a whole. The heir receives what is left after tax and normally pays nothing on the inheritance personally. The executor pays the tax to HMRC out of the estate. That is the biggest difference from the many European systems in which each heir pays on their own share with their own allowances.
The allowance is called the nil-rate band and stands at £325,000. Everything above costs 40%. An estate of £500,000 with no other reliefs therefore pays 40% on £175,000, which is £70,000. Leave at least 10% of the net estate to charity and certain parts pay only 36%.
The figures are standing still. The Budget annex of 28 October 2026 gives the same £325,000 nil-rate band and the same £175,000 residence nil-rate band for 2026/27 and 2027/28. If you are hoping inflation will drag the allowance up, you hope in vain.
And no, the UK has no separate gift tax. Gifts fall into the same inheritance tax if the giver dies within seven years. How that works is in gifts and the seven-year rule.
The allowance for the family home
On top of the £325,000 comes a second allowance, the residence nil-rate band. It is £175,000 and applies if you leave your home, or your share of it, to your children or grandchildren. Step, adopted and foster children count. Together that makes up to £500,000 tax-free.
The catch is in larger estates. The residence nil-rate band tapers from an estate of £2 million: it falls by £1 for every £2 above. At £2.35 million it is gone entirely.
Married couples and civil partners can transfer unused allowances. What the first to die did not use is added on the second death. Leaving everything to your spouse therefore does not waste an allowance; it only postpones it.
Who is caught since April 2025, and what foreigners pay
Until 5 April 2025 domicile decided whether the UK taxed your worldwide estate, and you only became deemed domiciled after 15 of 20 years in the UK. Since 6 April 2025 domicile and deemed domicile are abolished for inheritance tax. Only residence counts, regardless of common law domicile and regardless of passport: anyone UK resident in at least 10 of the last 20 tax years before the tax year of death or gift is a long-term UK resident. Then all assets worldwide fall within inheritance tax, including what you owned before you moved, the holiday home on Lake Garda as much as the portfolio in Frankfurt. The reform is part of the same package as the end of non-dom status for income tax.
The years are counted under the statutory residence test, the same rules as for income tax. The UK tax year runs from 6 April to 5 April, and a split year, the year of arrival or departure, counts as a full year. The Jansen family moves from Utrecht to Oxford in summer 2026: from the 2036/37 tax year both parents are long-term UK residents, and from then on the flat in Utrecht belongs to the UK tax base too. After ten consecutive tax years without UK residence the count resets, so someone returning after a long absence starts again from zero.
If you do not reach that threshold, the estate pays only on UK assets, such as UK property and accounts at UK banks. Some assets are excluded, for example foreign currency accounts with a bank or the Post Office and holdings in UK authorised unit trusts and OEICs.
UK residential property cannot escape the tax through a foreign company either. Since 6 April 2017, shares in a foreign company count as UK assets to the extent their value derives from UK residential property. Since 6 April 2026 the same applies to UK agricultural land. If you are thinking about a house in England, read buying a home in England first.
Leave the UK as a long-term resident and UK inheritance tax travels with you for a while. How long depends on how many of the 20 tax years before departure you were resident.
| Years UK resident (of 20) | Still caught after leaving |
|---|---|
| 10 to 13 | 3 tax years |
| 14 | 4 tax years |
| 15 | 5 tax years |
| 16 | 6 tax years |
| 17 | 7 tax years |
| 18 | 8 tax years |
| 19 | 9 tax years |
| 20 | 10 tax years |
HMRC Inheritance Tax Manual IHTM47020
Spouses: tax-free, with one important exception
What you leave or give to your spouse or civil partner is in principle tax-free, without limit. The exception concerns international families. If the deceased is a long-term UK resident but the surviving partner is not, the exemption is capped at the £325,000 nil-rate band. The cap covers all transfers to the partner together, not each gift.
A typical case: he has lived in London for fifteen years, she followed from Amsterdam three years ago. If he dies, only part is tax-free for her. The way out is an election: the partner can ask to be treated as a long-term resident. Then the full spouse exemption applies, but her own worldwide assets also become subject to UK inheritance tax.
The election is irrevocable and only ends after ten consecutive years without UK residence. After a death it must be made within two years. Whether it pays depends on how much the surviving partner owns outside the UK. That is a calculation, not a gut decision.
Former non-doms and trusts: what the transitional rules protect
If you were not UK-domiciled on 30 October 2024 and are not UK resident in the 2025/26 tax year, you do not become a long-term resident as long as you stay away; the old 15-of-20 test still applies to you. Anyone deemed domiciled on 30 October 2024 and not resident in 2025/26 loses the status after three years of non-residence. Return, and the normal 10-of-20 test applies, with earlier UK years counting again.
The reform hits excluded property trusts hardest. Previously, foreign trust assets stayed permanently outside UK inheritance tax if the settlor was not UK-domiciled when adding them. Today the settlor's status at each charging point decides: if they are a long-term resident, the ten-year charge and the exit charge apply to the foreign trust assets. If they stop being a long-term resident, the assets leave the regime, which also triggers an exit charge.
Property that was already excluded property in a trust before 30 October 2024 keeps some protection: the gifts with reservation rules (gifts the giver keeps benefiting from) do not apply, and trust charges are capped at £5 million per ten-year period. New trusts and later additions get no such protection. The Budget of 28 October 2026 wants to make moving to the UK easier for people with existing trusts; the only concrete measure so far is a capital gains tax easing where a trust becomes UK resident only temporarily because a trustee moves in (Finance Bill 2026-27). What trusts can still do is in our piece on trusts.
Inheriting a house in England: probate and payment
Before an heir can deal with UK assets, the executor needs probate, the court's authority to administer the estate. Inheritance tax usually has to be paid, at least in part, before probate is granted. It is due at the end of the sixth month after death, with interest after that. For property that has to be sold first, the tax can be paid in equal annual instalments over ten years. Scotland and Northern Ireland have their own procedures.
Pensions in the estate from April 2027
Until now unused pension funds in most UK schemes could be passed on free of inheritance tax. That ends on 6 April 2027: from then most unused pension funds and death benefits count as part of the estate. This is no longer a proposal but enacted in the Finance Act 2026.
The personal representative reports and pays, not the pension provider. Death in service benefits from a registered scheme stay outside, and what goes to a spouse or charity stays exempt. The Budget of 28 October 2026 adds technical detail: the future personal representative is to be able to direct the pension provider to pay the tax straight to HMRC. That is in the Finance Bill 2026-27 and not yet law.
Your home country: the second calculation
The same estate can be taxed again at home. European countries take very different approaches: some tax by where the deceased lived, some by where the heir lives, some keep nationals in their net for years after they have left, and some have no inheritance tax at all. Where both the UK and your home country charge, the question is who gives credit to whom.
Only a handful of countries have an estate tax convention with the UK: Ireland, South Africa, the United States, the Netherlands, Sweden and Switzerland, plus older estate duty treaties with France, Italy, India and Pakistan. Everyone else relies on unilateral credit, in the UK and usually at home. How the conventions divide taxing rights is in the UK's tax treaties. Your country's own rules are a question for an adviser there; we give you the UK figures and the questions to ask.
Three families show how it plays out. An engineer who was UK resident for twelve years and moves back to the continent stays a long-term resident for 3 more tax years: if she dies in that time, the UK taxes her worldwide estate and her home country may tax it as well. A banker who leaves after twenty years in London stays within UK inheritance tax for ten tax years while his new home may claim the same estate. For the conventions, a long-term UK resident has counted as deemed UK-domiciled since 6 April 2025, and the convention decides which state taxes first.
The third family is split across borders: the father has lived in Manchester for eleven years, the children live abroad. He is a long-term resident, so his portfolio at home falls into UK tax, while the children's country may tax their inheritance. Without a convention only credit eases the double charge, and not always fully. This is where planning before the tenth year pays.
Frequently asked questions
What is the inheritance tax allowance in England?
£325,000 per person. If the home goes to children or grandchildren, up to £175,000 more applies, £500,000 in total. Unused allowances of a deceased spouse can be transferred. The figures are unchanged for 2026/27 and 2027/28.
I live abroad and have inherited a house in England. Where do I pay?
Possibly in both countries. The UK taxes the house as a UK asset through inheritance tax, paid by the executor out of the estate. Your country may tax your inheritance because you live there. Without an estate tax treaty, relief usually comes as a credit at home.
The deceased lived abroad, the heir lives in England. Who taxes what?
The UK charges inheritance tax only on the deceased's UK assets, as long as they were not a long-term UK resident. That the heir lives in England triggers no UK tax, because the UK taxes the estate, not the heir. The deceased's country may tax under its own rules.
Is there a gift tax in England?
Not a separate one. Gifts are caught by inheritance tax if the giver dies within seven years, with tapering from the third year. Gifts into a trust can trigger tax immediately.
As a foreigner, do I pay UK inheritance tax on everything I own?
Only if you were UK resident in 10 of the last 20 tax years. Otherwise the estate pays only on UK assets. Your nationality plays no part.
I have lived in the UK for eight years. Do I need to act now?
Now is the right time to do the sums. From your eleventh tax year in the UK your worldwide estate is caught, and after leaving it stays so for at least three years. Gifts and structures set up before then follow different rules from those set up afterwards.
Sources: GOV.UK: How Inheritance Tax works: thresholds, rules and allowances; GOV.UK: Budget 2026, Overview of tax legislation and rates, Annex A; GOV.UK: Work out and apply the residence nil rate band; GOV.UK: Inheritance Tax if you're a long-term UK resident; HMRC Manual: IHTM47030 Spouse exemption, not a long-term UK resident; HMRC Manual: IHTM47031 Spousal long-term UK residence elections; HMRC Manual: IHTM04311 Schedule A1, UK residential and agricultural property; GOV.UK: Inheritance Tax, unused pension funds and death benefits; GOV.UK: Applying for probate; GOV.UK: Pay your Inheritance Tax bill; GOV.UK: Inheritance Tax, Double Taxation Relief; HMRC Manual: IHTM47020 Long-term UK residence test; HMRC Manual: IHTM47021 Transitional provisions; HMRC Manual: IHTM47022 Excluded property in a settlement at 30 October 2024; HMRC Manual: IHTM47052 Foreign settled property, relevant property; GOV.UK: Trusts and Inheritance Tax; GOV.UK: Reforming the taxation of non-UK domiciled individuals (TIIN); GOV.UK: Budget 2026, Overview of tax legislation and rates; GOV.UK: Budget 2026
