I
NRB · Nil-Rate Band
£325k
Tax-free for every person, regardless of who inherits.
Frozen until April 2031. Unused portion is transferable between spouses — so a married couple can pass £650,000 tax-free this way before anything else applies.
UK · Inheritance Tax · Plain EnglishFY 2026–27 · including April 2027 pension change
Inheritance Tax — who pays, and how to pay legally less.
About 4 % of UK estates pay it · most of what people pay is preventable
The rules haven't really changed in 30 years — but the thresholds are frozen, so the share of estates that pay quietly grows.
Most reductions come from reliefs that already exist. This page walks the system end-to-end.
II · The system in three numbers
Two thresholds and a single rate.
Frozen until April 2031 — the share that pays quietly grows
I · Does it apply
Most estates do not pay it.
Phase I of IV — does it apply
About 4% of UK deaths result in an inheritance-tax bill. The question is whether your estate is in that 4% — mostly an answer about thresholds, exempt beneficiaries, and how property passes.
II · How it's calculated
Property is what usually pushes an estate above the line.
Phase II of IV — how it's calculated
Most people who actually pay IHT do so because of property — house values pushing the estate above the combined £500k (single) or £1m (married couple) threshold. The mechanics below are the rules HMRC will apply.
III · How to reduce it
No clever trick. Well-trodden reliefs, used early.
Phase III of IV — how to reduce it
There is no shortcut. There are well-trodden HMRC-recognised reliefs and a discipline of using them over years rather than weeks. The earlier you start, the more options you have. Most reductions come from gifts, trusts (carefully), and structuring.
IV · How it's paid
Tax before probate. The Direct Payment Scheme solves the cash bind.
Phase IV of IV — how it's paid
If IHT is due, an executor (or administrator if no will) handles the form-filing and payment. The order matters: IHT is paid before probate is granted, which creates a famous chicken-and-egg problem the system has worked around with the Direct Payment Scheme.
VII · Edges & exceptions
The cases that trip people up.
Click any question to expand the full answer
The IHT system has more edge cases than this page can fully cover. These are the six that account for most real-world confusion — answered in full institutional prose, with bold flags where a specialist is essential.
What if the estate is worth more than £2 million?
The Residence Nil-Rate Band tapers from £2M — you lose £1 of RNRB for every £2 the estate exceeds the threshold. At £2.35M the full £175,000 is gone.
Above £2M, additional planning is usually worth professional advice — small reductions can preserve large reliefs. The 'lose £87,500 of relief by being £175k above the threshold' arithmetic is the classic example.Speak to a chartered tax adviser if you're near or above this line — it's the single most leveraged decision point in IHT planning.
When can I use the simpler 'excepted estate' route?
Estates that clearly owe no IHT — under the thresholds, no foreign assets, no trusts, no significant chargeable gifts — can use the simplified Estate Information Summary built into the digital probate application.
Most estates don't qualify once you scratch the surface; the rules defaulted to IHT400 in 2022. The free guidance atgov.uk/inheritance-tax-forms has the current decision tree, or our /tools/iht400 walkthrough flags which route applies to you.
I own property abroad. Does that get taxed twice?
Possibly. If you owned property abroad, the country it's in may charge its own death tax. The UK has double-tax treaties with several countries (US, France, Switzerland, others) that prevent double taxation.
Without a treaty, both countries can tax the same asset, with relief mechanisms varying.Always specialist advice for any cross-border element — the rules are intricate and the cost of getting it wrong is large. A chartered tax adviser with international experience is essential.
What's pre-owned assets tax (POAT)?
POAT is HMRC's backstop for schemes that try to avoid the gift-with-reservation rules. If you gift an asset but continue to benefit from it (live in the gifted house, drive the gifted car, etc.), POAT may charge income taxon the benefit — sidestepping the IHT rules entirely.
Catches arrangements like 'home loan' schemes. Niche but worth knowing exists if anyone offers you a clever-sounding scheme — usually a sign to walk away.
Why do probate and IHT block each other?
Probate cannot be granted until IHT is paid (or arranged via the Direct Payment Scheme). HMRC won't process IHT400 quickly without the right information.
The order is fixed:IHT400 first → DPS or instalments election → IHT421 issued → submit to Probate Registry. Total elapsed time: typically 16–28 weeks. Our /tools/probate-cost-calculator has the picture.
The Direct Payment Scheme is what unblocks this in most cases — banks will pay HMRC directly from the deceased's accounts before probate.
When should I get professional advice?
Always: estate near or above £2M, business interests, foreign property, trust involvement, complex family (second marriages, stepchildren), agricultural property, post-April-2027 pension planning.
Signum — Valoren's own specialist desk, disclosed plainly as ours — coordinates with chartered tax advisers on exactly this: we handle the records and the briefing, they handle the regulated tax advice.
Prefer to go independent instead? You can find a chartered tax adviser through the CIOT directory and ask for an initial inheritance-tax consultation — getting the position checked early can save five-figure mistakes.
The boundary
This is a plain-English reference, not tax advice. The IHT system has more edge cases than any single page can cover — domicile rules, settled property, charitable variations, business and agricultural relief mechanics, the April 2027 pension transition.
Start with a Valoren specialist session if you want help thinking it through — or a chartered tax adviser via the CIOT directory for technical planning. We work alongside both.
Prepared by Valoren · valoren.uk · updated 2026-05
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