You usually inherit money tax free in the UK, because inheritance tax is paid by the estate of the person who died, not by you. The tax-free amount is set by nil-rate bands: £325,000 passes on tax free, up to £500,000 where a home passes to direct descendants, and up to £1,000,000 for a married couple. Anything above is taxed at 40% (gov.uk, as at August 2026, subject to change).
Do you pay tax on money you inherit?
In most cases, no. As the person inheriting, you do not pay tax on a cash gift or a share of an estate you receive. Any inheritance tax due is worked out on the whole estate and paid by the executor before anything is shared out, so beneficiaries receive their share after tax, not on top of it.
The question has two answers. As a beneficiary in England and Wales there is no cap and no personal tax on what you receive; you could inherit £2,000,000 and pay nothing yourself. The tax attaches to the estate, so the real question is how large an estate can be before it owes inheritance tax, which is what the thresholds below set. Income the inheritance later earns can be taxable, but the inheritance itself reaches you tax free.
How much can one person's estate pass on tax free?
One person's estate passes on the first £325,000 tax free under the nil-rate band. A residence nil-rate band of up to £175,000 is added when a main home is left to children, grandchildren or other direct descendants, giving up to £500,000 in total. Above the available threshold, the estate pays 40%.
The £325,000 nil-rate band applies to every estate. The residence nil-rate band only applies to a home passing to direct descendants and is capped at the home's value. Both bands are frozen until 5 April 2031, a freeze extended at the Budget on 26 November 2025 (gov.uk, as at August 2026, subject to change).
| Allowance | Amount | Condition |
|---|---|---|
| Nil-rate band | £325,000 | Every estate |
| Residence nil-rate band | Up to £175,000 | Main home left to children or grandchildren |
| Single person, total | Up to £500,000 | Where the home condition is met |
| Rate above the threshold | 40% | 36% if 10% or more of the estate goes to charity |
Source: gov.uk, as at August 2026, subject to change. See our fuller guide to how inheritance tax works.
How much can a married couple pass on tax free?
A married couple or civil partners can pass on up to £1,000,000 tax free. Everything left to a surviving spouse is exempt, and the first to die passes their unused nil-rate band and residence nil-rate band to the survivor. On the second death, the survivor can use two of each band: £325,000 plus £325,000, and £175,000 plus £175,000.
The £1,000,000 figure is not automatic. It needs a home worth at least £350,000 passing to direct descendants, both residence bands available, and an estate under £2,000,000. Unmarried couples cannot transfer bands, so this uplift does not apply to them.
Worked example: a married couple with a home
A husband dies and leaves everything to his wife. No tax is due, because gifts between spouses are exempt, and his unused bands pass to her. When she later dies, leaving the home to their children, her estate can use:
- £325,000 her own nil-rate band
- £325,000 his transferred nil-rate band
- £175,000 her residence nil-rate band
- £175,000 his transferred residence nil-rate band
Total: £1,000,000 tax free.
An estate of £1,200,000 here would pay 40% on the £200,000 above the threshold, a bill of £80,000. Our guide on inheritance tax when the second parent dies explains this further.
What if the estate is worth more than £2 million?
The residence nil-rate band is reduced for larger estates. For every £2 of estate value above £2,000,000, £1 of residence nil-rate band is withdrawn. A single person's £175,000 band is gone once the estate reaches £2,350,000, and a couple's combined £350,000 disappears by £2,700,000, leaving only the £325,000 nil-rate bands.
This taper catches families who assume the £1,000,000 figure is fixed: a home passing to children does not save the residence band if the wider estate is large enough to taper it away. The £2,000,000 taper threshold is also frozen until 5 April 2031 (gov.uk, as at August 2026, subject to change).
| Estate value | Residence nil-rate band left (single person) |
|---|---|
| Up to £2,000,000 | Full £175,000 |
| £2,100,000 | £125,000 |
| £2,200,000 | £75,000 |
| £2,350,000 or more | £0 |
Source: gov.uk, as at August 2026, subject to change.
Can you increase how much passes on tax free?
Yes, within the rules. Lifetime gifts, spouse and charity exemptions, and reliefs for business and farm assets can all move value outside the taxable estate. Most everyday planning uses the gift exemptions and the seven-year rule, so more can pass to your family free of inheritance tax.
The main levers, each with conditions worth checking against your position, are:
- Yearly gift exemptions. You can give away £3,000 each tax year, plus £250 to any number of other people, free of inheritance tax. See how much you can gift tax free.
- The seven-year rule. Larger gifts fall outside your estate if you live seven years after making them. Die within seven years and the gift counts towards your nil-rate band first, with taper relief on any tax above it.
- Spouse and charity gifts. Anything left to a UK spouse or civil partner, or to a registered charity, is exempt. Leaving 10% or more of the estate to charity also cuts the rate on the rest from 40% to 36%.
- Business and farm relief. From 6 April 2026, agricultural and business property relief gives 100% relief on the first £2,500,000 of qualifying assets per person, transferable to £5,000,000 for a couple, and 50% above that (announced 23 December 2025).
One change ahead: from 6 April 2027, most unused pension funds will count as part of the estate for inheritance tax (see pensions and inheritance tax from 2027). Bringing these levers together is the work of estate planning.
Frequently asked questions
In short, you pay no personal tax on what you inherit. Inheritance tax falls on the estate, which passes on £325,000 tax free, up to £500,000 with a qualifying home left to direct descendants, and up to £1,000,000 for a married couple. The questions below cover the situations people ask about most.
How much can you inherit from your parents tax free?
There is no personal cap and no tax on you as the person inheriting from a parent. Any inheritance tax is charged on your parent's estate: the first £325,000 is tax free, up to £500,000 if their home passes to children or grandchildren, and up to £1,000,000 where a couple's estate combines both allowances (gov.uk, as at August 2026, subject to change).
Do you have to pay tax on money you inherit in the UK?
Not as the beneficiary. Inheritance tax is paid by the estate before anything is shared out, so you receive your share after any tax is settled. Income the inheritance later earns, such as interest or rent, can be taxable, and selling inherited assets may bring capital gains tax, but the inheritance itself reaches you tax free.
What is the inheritance tax threshold for 2026?
The nil-rate band is £325,000 and the residence nil-rate band is up to £175,000, both frozen until 5 April 2031. A single person can pass on up to £500,000 where a home goes to direct descendants, and a married couple up to £1,000,000 (gov.uk, as at August 2026, subject to change).
How much can a married couple leave without paying inheritance tax?
Up to £1,000,000, made up of two £325,000 nil-rate bands and two £175,000 residence nil-rate bands. It needs a qualifying home worth at least £350,000 passing to direct descendants and an estate under £2,000,000, above which the residence bands start to taper away.