What is Nil Rate Band?
The £325,000 threshold below which no inheritance tax is charged on an estate.
Key Facts
- ✓ Current threshold: £325,000
- ✓ Frozen since 2009 — the longest-frozen threshold
- ✓ Unused NRB can transfer to surviving spouse (up to £650,000 combined)
- ✓ Applies to total estate including property and investments
- ✓ 40% tax charged on value above the NRB
Current Rates (2025/26)
- ▸ Nil rate band: £325,000
- ▸ Transferable: up to £650,000 for couples
Explanation
The nil rate band (NRB) is the inheritance tax threshold — the amount of an estate that can be passed on free of IHT. For 2025/26 it is £325,000, and it has been frozen at this level since 2009. Any value above the NRB is taxed at 40% (or 36% if qualifying charitable donations are made). The NRB is one of the longest-frozen tax thresholds in the UK. If the deceased was married or in a civil partnership and did not use their full NRB, the unused portion can be transferred to the surviving spouse's estate. This means a married couple could have a combined NRB of up to £650,000. The NRB applies to the total taxable estate, which includes property, savings, investments, and some gifts made within seven years of death.
Try the calculator: Use our free calculator to see how nil rate band affects your finances.
Inheritance Tax Calculator →Other Glossary Terms
The system HMRC uses to collect income tax and National Insurance directly from employees' wages.
National InsuranceA UK tax on earnings and self-employed profits that funds the state pension, NHS, and benefits.
Personal AllowanceThe amount of income you can earn each year before paying income tax — currently £12,570.
Basic Rate (20%)The 20% income tax rate applied to taxable income between £12,571 and £50,270.
Higher Rate (40%)The 40% income tax rate applied to taxable income between £50,271 and £125,140.
Additional Rate (45%)The 45% income tax rate applied to taxable income above £125,140.