Is it true a couple can leave £1 million tax free?

Yes, but only with a home passing to children or grandchildren. Each person has a £325,000 nil-rate band and a £175,000 residence band, and both transfer to a surviving spouse unused. Two of each is £1 million. Without a qualifying home it is £650,000.

Why does a large estate lose the residence band?

It tapers away above £2 million, by £1 for every £2 the estate exceeds that. It is gone entirely at £2.35 million. The effect is a marginal rate of 60% on that stretch, which is why estates near £2 million often benefit most from giving during life.

Do gifts I made before dying count?

Gifts made in the seven years before death can be brought back into the estate, on a sliding scale after three years. This calculator does not model them, and on a large estate they are usually the single biggest factor. Take advice.

How does the 36% charity rate work?

Leave at least 10% of the net estate to charity and the rate on the rest drops from 40% to 36%. Because the gift is also exempt, giving exactly 10% often costs the beneficiaries very little compared with giving nothing.

Is anything I enter here recorded?

No. Every figure is calculated in your browser and none of it is sent anywhere. This is a page about your death and your family; it seemed worth being unusually clear about that.

HMRC Current IHT thresholds Checked 3 Sep 2026

Inheritance tax calculator

What an estate would owe, and how much of the threshold a home and a late spouse's unused bands add.

The estate England, Wales, NI & Scotland

Estate value (£)

Of which, the home (£)

Spouse's unused bands (%)

Left to charity (£)

Home goes to children or grandchildren

Inheritance tax£0

Tax-free threshold£0

Beneficiaries receive£0

Nil-rate band: £0
Residence nil-rate band: £0
Residence band lost to the taper: £0
Left to charity, exempt: £0
Taxable estate: £0
Tax at the applicable rate: £0

Two thresholds, not one

Every estate has a nil-rate band of £325,000. On top of that, an estate that passes a home to children or grandchildren gets a residence nil-rate band of £175,000. Together that is the £500,000 figure people quote, and it explains why the answer changes so sharply depending on who inherits the house.

Both bands transfer to a surviving spouse or civil partner to the extent they were unused. A widow whose husband left everything to her therefore has two of each, which is where the £1 million headline comes from. It is real, but only with a qualifying home. Without one, a couple's combined threshold is £650,000.

The £2 million cliff edge

Above £2,000,000 the residence band is withdrawn by £1 for every £2 the estate exceeds that figure, and it is gone entirely at £2.35 million. Across that stretch you lose threshold at the same time as being taxed at 40%, which produces an effective marginal rate of 60%.

It is the same shape as the £100,000 personal allowance trap in income tax, and it has the same implication: an estate sitting just above £2 million has an unusually strong reason to reduce below it, whether by lifetime giving or a charitable legacy.

The 36% rate is often nearly free

Leave at least 10% of the net estate to charity and the rate on everything else falls from 40% to 36%. Because the gift itself is also exempt, the cost to the beneficiaries of giving exactly 10% is far smaller than it looks, and on some estates it is close to nothing. That is a genuine quirk worth modelling before writing a will.

What this does not do, and it matters here

It does not handle gifts made in the seven years before death, which on a large estate are usually the single biggest factor. Nor business or agricultural relief, trusts, the deceased's domicile, life insurance written in trust, or estates split into components for the charity test. The 10% test here compares the gift with the estate after the threshold, which is the ordinary case but not the full statutory rule.

Inheritance tax is the area of UK tax where good advice most reliably pays for itself. Treat this as a way to understand the shape of the problem, then speak to a solicitor.

Common questions

Is it true a couple can leave £1 million tax free?: Yes, but only with a home passing to children or grandchildren. Each person has a £325,000 nil-rate band and a £175,000 residence band, and both transfer to a surviving spouse unused. Two of each is £1 million. Without a qualifying home it is £650,000.
Why does a large estate lose the residence band?: It tapers away above £2 million, by £1 for every £2 the estate exceeds that. It is gone entirely at £2.35 million. The effect is a marginal rate of 60% on that stretch, which is why estates near £2 million often benefit most from giving during life.
Do gifts I made before dying count?: Gifts made in the seven years before death can be brought back into the estate, on a sliding scale after three years. This calculator does not model them, and on a large estate they are usually the single biggest factor. Take advice.
How does the 36% charity rate work?: Leave at least 10% of the net estate to charity and the rate on the rest drops from 40% to 36%. Because the gift is also exempt, giving exactly 10% often costs the beneficiaries very little compared with giving nothing.
Is anything I enter here recorded?: No. Every figure is calculated in your browser and none of it is sent anywhere. This is a page about your death and your family; it seemed worth being unusually clear about that.