# Inheritance tax

url: https://whereyourmoneygoes.co.uk/inheritance-tax/
updated: 29 September 2026
licence: Our words, analysis, charts and derived calculations: CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/), credit [Tekstak Ltd](https://tek-stak.co.uk). Figures: each source's own licence, listed under Sources.
publisher: [Tekstak Ltd](https://tek-stak.co.uk)

# Inheritance tax



Last updated 29 September 2026.
Figures refresh every night. [How each figure is worked out](/methodology/).





**A 40% tax on the part of an estate above the nil-rate band, paid by the estate before anything is passed on.** The estate, not the people who inherit. Only about one estate in twenty pays anything at all, though the share is rising as the threshold stays frozen. It raised **£8.5bn** in 2025–26, which is 0.9% of everything HMRC collects and 0.28% of the economy. That is up £218m (2.6%) on the year before.



Figures for the 2025–26 financial year. Source:
[HM Revenue and Customs](https://www.gov.uk/government/statistics/hmrc-tax-and-nics-receipts-for-the-uk).





## Key figures



- £8.5bnRaised in 2025–26

▲
- 0.9%Of everything HMRC collects

▼
2025–26
- 0.28%Of the whole economy (GDP)

▬
2025–26
- -0.8%In real terms, against the 2024–25 peak

Adjusted for inflation with the GDP deflator
As of 6 April 2025
- £325,000Nil-rate band

Unchanged since 6 April 2009




Sources: [HM Revenue and Customs](https://www.gov.uk/government/statistics/hmrc-tax-and-nics-receipts-for-the-uk), [HM Treasury](https://www.gov.uk/government/collections/gdp-deflators-at-market-prices-and-money-gdp).





## What is the short version?



- **How big:** £8.5bn in 2025–26, 0.9% of everything HMRC collects; after inflation, 31% more than in 2015–16.
- **A £700,000 estate including a home left to children:** That is 11.4% of the estate, not 40%. And if the deceased had a spouse who left everything to them, the unused allowances transfer and this estate would pay nothing.
- **Latest change, 2026:** Unused pension pots begin to count towards the estate, and agricultural and business property relief is capped.
- **Where it goes:** Nowhere in particular, like almost every tax: it is not earmarked.
- **The argument:** It taxes unearned windfalls rather than work; against that, the money was already taxed as income when it was earned.






## How much does it raise?




**Inheritance tax receipts, cash and real terms**










**The numbers behind this chart**





| Financial year | Cash | Real, 2025-26 prices |
| --- | --- | --- |
| 2006–07Details | £3,545m | £5,803m |
| Real, 2025-26 prices£5,803m | | |
| 2007–08Details | £3,824m | £6,139m |
| Real, 2025-26 prices£6,139m | | |
| 2008–09Details | £2,839m | £4,394m |
| Real, 2025-26 prices£4,394m | | |
| 2009–10Details | £2,384m | £3,643m |
| Real, 2025-26 prices£3,643m | | |
| 2010–11Details | £2,718m | £4,084m |
| Real, 2025-26 prices£4,084m | | |
| 2011–12Details | £2,903m | £4,271m |
| Real, 2025-26 prices£4,271m | | |
| 2012–13Details | £3,105m | £4,490m |
| Real, 2025-26 prices£4,490m | | |
| 2013–14Details | £3,402m | £4,819m |
| Real, 2025-26 prices£4,819m | | |
| 2014–15Details | £3,804m | £5,313m |
| Real, 2025-26 prices£5,313m | | |
| 2015–16Details | £4,650m | £6,450m |
| Real, 2025-26 prices£6,450m | | |
| 2016–17Details | £4,824m | £6,560m |
| Real, 2025-26 prices£6,560m | | |
| 2017–18Details | £5,205m | £6,990m |
| Real, 2025-26 prices£6,990m | | |
| 2018–19Details | £5,359m | £7,036m |
| Real, 2025-26 prices£7,036m | | |
| 2019–20Details | £5,122m | £6,552m |
| Real, 2025-26 prices£6,552m | | |
| 2020–21Details | £5,326m | £6,475m |
| Real, 2025-26 prices£6,475m | | |
| 2021–22Details | £6,054m | £7,342m |
| Real, 2025-26 prices£7,342m | | |
| 2022–23Details | £7,087m | £8,031m |
| Real, 2025-26 prices£8,031m | | |
| 2023–24Details | £7,499m | £8,073m |
| Real, 2025-26 prices£8,073m | | |
| 2024–25Details | £8,249m | £8,533m |
| Real, 2025-26 prices£8,533m | | |
| 2025–26Details | £8,467m | £8,467m |
| Real, 2025-26 prices£8,467m | | |






Figures for the 2025–26 financial year. Source:
[HM Revenue and Customs](https://www.gov.uk/government/statistics/hmrc-tax-and-nics-receipts-for-the-uk), [HM Treasury](https://www.gov.uk/government/collections/gdp-deflators-at-market-prices-and-money-gdp).




It raised more than the year before, but the other taxes grew faster, so its share of the total fell.




**Inheritance tax as a share of the economy, 1869–70 to 2022–23**










**The numbers behind this chart**



Search




| Financial year | % of GDP |
| --- | --- |
| 1869–70 | 0.425% |
| 1873–74 | 0.401% |
| 1877–78 | 0.462% |
| 1881–82 | 0.528% |
| 1885–86 | 0.563% |
| 1889–90 | 0.605% |
| 1893–94 | 0.653% |
| 1897–98 | 0.888% |
| 1901–02 | 0.978% |
| 1905–06 | 0.881% |
| 1909–10 | 1.06% |
| 1913–14 | 1.136% |
| 1917–18 | 0.724% |
| 1921–22 | 1.113% |
| 1925–26 | 1.4% |
| 1929–30 | 1.745% |
| 1933–34 | 2.002% |
| 1937–38 | 1.692% |
| 1941–42 | 1.048% |
| 1945–46 | 1.239% |
| 1949–50 | 1.558% |
| 1953–54 | 0.986% |
| 1957–58 | 0.791% |
| 1961–62 | 0.928% |
| 1965–66 | 0.782% |
| 1969–70 | 0.716% |
| 1973–74 | 0.497% |
| 1977–78 | 0.24% |
| 1981–82 | 0.167% |
| 1985–86 | 0.21% |
| 1989–90 | 0.195% |
| 1993–94 | 0.171% |
| 1997–98 | 0.174% |
| 2001–02 | 0.204% |
| 2005–06 | 0.229% |
| 2009–10 | 0.153% |
| 2013–14 | 0.188% |
| 2017–18 | 0.247% |
| 2021–22 | 0.259% |
| 2022–23 | 0.281% |











Figures for the 2022–23 financial year. Source:
[Office for Budget Responsibility](https://obr.uk/data/).





**How "real terms" is worked out**



Real terms use HM Treasury's GDP deflator, rebased to 2025-26 prices. That is the
measure the Treasury and the OBR use for public finances; the consumer price index is the
right one for a shopping basket, not for the size of the state.






## How does it work?



Most people call it the death tax. It is charged on what you leave, above a threshold called the nil-rate band, and at a single rate of 40% on the excess.

There are two allowances. The nil-rate band applies to any estate. The residence nil-rate band adds more on top, but only if you leave your home to direct descendants, and it tapers away on estates above £2m. Together they can shelter a substantial amount.

Anything left to a spouse or civil partner is exempt, and an unused allowance transfers to them. This is why a couple can pass on twice the individual allowance: the first death uses none of it, and the survivor gets both.

The thresholds and rates for 2026-27:





| What | Amount |
| --- | --- |
| Nil-rate band, per person | £325,000 |
| Residence nil-rate band, a home left to children or grandchildren | £175,000 |
| Most one person can pass on tax-free | £500,000 |
| Most a married couple or civil partners can pass on tax-free | £1,000,000 |
| Rate above the threshold | 40% |
| Rate if at least 10% of the estate goes to charity | 36% |





Rates: [GOV.UK, Inheritance Tax](https://www.gov.uk/inheritance-tax).
Checked by hand 22 September 2026.

Gifts made more than seven years before death usually fall out of the estate entirely. Gifts within seven years may be taxed on a sliding scale. This is the single largest avoidance route and it is entirely legal and intended.

The reliefs are where the real arguments are. Business and agricultural property relief have historically taken qualifying farms and trading businesses out of the tax altogether, on the argument that heirs should not have to break up a going concern to pay a bill. Changes announced in the 2024 Budget cap that relief, and from April 2026 unused pension pots also count as part of the estate.



### What does this mean for you?



Put in the value of an estate: everything owned, less debts and funeral costs.


Value of the estate
£



On an estate of £600,000 left by one person, the tax is **£110,000**, or **£40,000** if a home in it goes to children or grandchildren.



2026-27: 40% above the £325,000 nil-rate band, which rises to £500,000 with the residence band. Everything left to a spouse or civil partner is exempt and their unused bands pass on, so a couple can leave up to £1,000,000. Gifts in the last seven years and the taper of the residence band above £2 million are left out.






### A £700,000 estate including a home left to children





| Step | Amount | Note |
| --- | --- | --- |
| Estate valueDetails | £700,000 | |
| | | |
| Nil-rate bandDetails | £325,000 | tax-free |
| Notetax-free | | |
| Residence nil-rate bandDetails | £175,000 | because the home goes to descendants |
| Notebecause the home goes to descendants | | |
| Taxable amountDetails | £200,000 | |
| | | |
| Inheritance tax at 40%Details | £80,000 | |
| | | |





**That is 11.4% of the estate, not 40%. And if the deceased had a spouse who left everything to them, the unused allowances transfer and this estate would pay nothing.**







## How has it changed?





**Inheritance tax thresholds each tax year**


- nil-rate band





2008–09: £312,000 → 2026–27: **£325,000**

- residence nil-rate band





2017–18: £100,000 → 2026–27: **£175,000**



Each panel starts at zero on its own scale. Cash values, not adjusted for inflation: a flat line is a freeze, and a freeze is a real-terms cut.




**Show as a table**





| Tax year | nil-rate band | residence nil-rate band |
| --- | --- | --- |
| 2008–09Details | £312,000 | – |
| residence nil-rate band– | | |
| 2009–10Details | £325,000 | – |
| residence nil-rate band– | | |
| 2010–11Details | £325,000 | – |
| residence nil-rate band– | | |
| 2011–12Details | £325,000 | – |
| residence nil-rate band– | | |
| 2012–13Details | £325,000 | – |
| residence nil-rate band– | | |
| 2013–14Details | £325,000 | – |
| residence nil-rate band– | | |
| 2014–15Details | £325,000 | – |
| residence nil-rate band– | | |
| 2015–16Details | £325,000 | – |
| residence nil-rate band– | | |
| 2016–17Details | £325,000 | – |
| residence nil-rate band– | | |
| 2017–18Details | £325,000 | £100,000 |
| residence nil-rate band£100,000 | | |
| 2018–19Details | £325,000 | £125,000 |
| residence nil-rate band£125,000 | | |
| 2019–20Details | £325,000 | £150,000 |
| residence nil-rate band£150,000 | | |
| 2020–21Details | £325,000 | £175,000 |
| residence nil-rate band£175,000 | | |
| 2021–22Details | £325,000 | £175,000 |
| residence nil-rate band£175,000 | | |
| 2022–23Details | £325,000 | £175,000 |
| residence nil-rate band£175,000 | | |
| 2023–24Details | £325,000 | £175,000 |
| residence nil-rate band£175,000 | | |
| 2024–25Details | £325,000 | £175,000 |
| residence nil-rate band£175,000 | | |
| 2025–26Details | £325,000 | £175,000 |
| residence nil-rate band£175,000 | | |
| 2026–27Details | £325,000 | £175,000 |
| residence nil-rate band£175,000 | | |






Figure as of 22 September 2026. Source:
[Office for Budget Responsibility](https://obr.uk/docs/dlm_uploads/OBR_Economic_and_fiscal_outlook_November_2025.pdf).




How it got here, and why each change was made:



- **1694**Probate duty, the first tax on passing on wealth, is introduced to pay for war with France.
- **1894**Estate duty replaces a patchwork of death duties and becomes the first progressive tax on estates. Rates eventually reach 80%.
- **1975**Capital Transfer Tax replaces estate duty and taxes lifetime gifts as well, to close the obvious gap.
- **1986**Inheritance tax replaces it, and lifetime gifts made more than seven years before death become exempt again.
- **2007**Unused nil-rate bands become transferable between spouses, effectively doubling the allowance for couples.
- **2017**The residence nil-rate band is phased in for homes left to descendants.
- **2009**The nil-rate band reaches £325,000, where it has stayed ever since. Frozen until April 2031, it will have been unchanged for 22 years.
- **2026**Unused pension pots begin to count towards the estate, and agricultural and business property relief is capped.






## Where does the money go?



**Nowhere in particular.** Inheritance tax is not earmarked. It goes into the Consolidated Fund with almost every other tax and is spent on whatever the government of the day decides. Anyone who tells you a particular tax "pays for" a particular service is describing an illustration, not a rule.



Because it is not earmarked, the only honest way to show what it pays for is by proportion. If
inheritance tax receipts of £8.5bn were spent in the same proportions as all
public spending in 2025-26, they would break down like this. It is an illustration of scale,
not a statement about where those particular pounds went.




**If £8.5bn of inheritance tax were spent like all public money in 2025-26**



- 1. Social protection, including the state pension

£2.8bn 33.2% of spending
- 2. Health

£1.8bn 21% of spending
- 3. Debt interest

£898m 10.6% of spending
- 4. Education

£864m 10.2% of spending
- 5. Economic affairs, including transport

£652m 7.7% of spending
- 6. Defence

£449m 5.3% of spending
- 7. Public order and safety

£381m 4.5% of spending
- 8. General public services

£246m 2.9% of spending
- 9. Housing and community

£152m 1.8% of spending
- 10. Environment

£135m 1.6% of spending
- 11. Culture, media and sport

£102m 1.2% of spending





Spending shares from HM Treasury’s Public Expenditure Statistical Analyses. An illustration of scale, not where these particular pounds went.




**Show as a table**





| Name | Equivalent share of inheritance tax |
| --- | --- |
| 1. Social protection, including the state pension | £2.8bn |
| 2. Health | £1.8bn |
| 3. Debt interest | £898m |
| 4. Education | £864m |
| 5. Economic affairs, including transport | £652m |
| 6. Defence | £449m |
| 7. Public order and safety | £381m |
| 8. General public services | £246m |
| 9. Housing and community | £152m |
| 10. Environment | £135m |
| 11. Culture, media and sport | £102m |








See [for every £100 of tax](/for-every-100-pounds-of-tax/) for the full picture.





## Does it change what people do?



Inheritance tax raises comparatively little for the political heat it generates, and that is partly because it is avoidable by those with the most to lose: gifting early, using trusts and holding qualifying business assets all work. The result is a tax that falls hardest on estates too large to escape it and too small to plan around it, which is a common criticism from both directions.



[When a tax rise stops raising money](/when-tax-rises-lose-revenue/) looks at the
cases where the effect has been large enough to move the revenue.





## How does that compare with other countries?



**In 2024 the UK raised 0.3% of GDP this way: fourth of the 12 countries compared here.**




**Revenue from this heading as a share of GDP, 2024**



- 1. France

0.7%
- 2. Japan

0.6%
- 3. Netherlands

0.3%
- ◆4. United Kingdom

0.3%
- 5. Denmark

0.3%
- 6. Germany

0.2%
- 7. Spain

0.2%
- 8. Ireland

0.2%
- 9. United States

0.1%
- 10. Italy

0.0%
- 11. Canada

0.0%
- 12. Sweden

0.0%




◆ UK





**Show as a table**





| Name | Share of GDP |
| --- | --- |
| 1. France | 0.7% |
| 2. Japan | 0.6% |
| 3. Netherlands | 0.3% |
| 4. United Kingdom (UK) | 0.3% |
| 5. Denmark | 0.3% |
| 6. Germany | 0.2% |
| 7. Spain | 0.2% |
| 8. Ireland | 0.2% |
| 9. United States | 0.1% |
| 10. Italy | 0.0% |
| 11. Canada | 0.0% |
| 12. Sweden | 0.0% |






Figure as of 1 January 2024. Source:
[OECD](https://data-explorer.oecd.org/vis?df[ds]=dsDisseminateFinalDMZ&df[id]=DSD_REV_COMP_OECD%40DF_RSOECD).




Most developed countries tax inheritance in some form, but the UK’s flat 40% above a threshold is unusual. Several countries instead tax the recipient, at rates that depend on how closely related they are and how much they personally receive, which spreads the burden differently.




**What is being compared**



The OECD heading is estate, inheritance and gift taxes together.



Countries are those this site compares throughout, not the whole OECD, and a country appears only
where it reports this heading for 2024.






## What are the arguments?





### The case for inheritance tax



- It taxes unearned windfalls rather than work.
- Inherited wealth is a major driver of inequality between generations and between families.
- It is paid by a small number of large estates, not by most families.
- Without it, large fortunes compound across generations untaxed.





### The case against



- The money was already taxed as income when it was earned.
- It is avoidable by the very wealthy and unavoidable for those just over the threshold.
- A frozen threshold has quietly pulled ordinary homeowners into a tax designed for the rich.
- It can force the sale of family businesses and farms, though the extent of this is disputed.






Both columns are set out as their strongest case, not as a preferred answer and a strawman. See
[how this site handles contested questions](/neutrality/).





## Common questions


Who actually pays inheritance tax?
A 40% tax on the part of an estate above the nil-rate band, paid by the estate before anything is passed on. The estate, not the people who inherit. Only about one estate in twenty pays anything at all, though the share is rising as the threshold stays frozen.How much does inheritance tax raise?
£8.5bn in 2025–26, which is 0.9% of everything HMRC collects.Where does inheritance tax go?
Nowhere in particular. Inheritance tax is not earmarked. It goes into the Consolidated Fund with almost every other tax and is spent on whatever the government of the day decides. Anyone who tells you a particular tax "pays for" a particular service is describing an illustration, not a rule.





## Use this data



The figures belong to the bodies that published them and are used under their terms, listed in
[Sources for this page](#sources); most are Crown copyright under the Open Government Licence.
Only our own words, analysis, charts and derived calculations are ours, published under
[CC BY 4.0](https://creativecommons.org/licenses/by/4.0/): reuse them, including
commercially, if you credit [Tekstak Ltd](https://tek-stak.co.uk) and link back to this page.



### Download



- [Inheritance tax receipts by financial year (CSV)](/data/receipts-inheritance-tax.csv)
[JSON](/data/receipts-inheritance-tax.json) HM Revenue and Customs: [Open Government Licence v3.0](https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/)
- [Public sector receipts as a share of GDP since 1900 (CSV)](/data/obr-total-receipts-share-gdp.csv)
[JSON](/data/obr-total-receipts-share-gdp.json) Office for Budget Responsibility: [Open Government Licence v3.0](https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/)
- [Total HMRC receipts by financial year (CSV)](/data/receipts-total.csv)
[JSON](/data/receipts-total.json) HM Revenue and Customs: [Open Government Licence v3.0](https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/)

- [All data, field definitions and licences](/data/)




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## Sources for this page





| Source | Publisher | Figures as of | Updated | Licence |
| --- | --- | --- | --- | --- |
| [HMRC tax receipts and National Insurance contributions for the UK](https://www.gov.uk/government/statistics/hmrc-tax-and-nics-receipts-for-the-uk) | HM Revenue and Customs | the 2025–26 financial year | annual | [Open Government Licence v3.0](https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/) |
| [Historical public finances database](https://obr.uk/data/) | Office for Budget Responsibility | the 2022–23 financial year | annual | [Open Government Licence v3.0](https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/) |
| [GDP deflators at market prices, and money GDP](https://www.gov.uk/government/collections/gdp-deflators-at-market-prices-and-money-gdp) | HM Treasury | the 2025–26 financial year | annual | [Open Government Licence v3.0](https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/) |
| [Office for Budget Responsibility, Economic and fiscal outlook, November 2025, Box 3.3](https://obr.uk/docs/dlm_uploads/OBR_Economic_and_fiscal_outlook_November_2025.pdf) | Office for Budget Responsibility | 22 September 2026 | semiannual | [Open Government Licence v3.0](https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/) |
| [Revenue Statistics: comparative tables](https://data-explorer.oecd.org/vis?df[ds]=dsDisseminateFinalDMZ&df[id]=DSD_REV_COMP_OECD%40DF_RSOECD) | OECD | 1 January 2024 | annual | [CC BY 4.0 (OECD)](https://www.oecd.org/en/about/terms-conditions.html) |





Each source's figures are used under the licence shown. Our own words, analysis, charts and derived calculations
are ours, under [CC BY 4.0](https://creativecommons.org/licenses/by/4.0/).

## Related pages

- [Next in this section: Vehicle Excise Duty, or "road tax"](https://whereyourmoneygoes.co.uk/vehicle-excise-duty/)
- [How much are probate, court, Land Registry and planning fees?](https://whereyourmoneygoes.co.uk/probate-court-land-registry-and-planning-fees/)
- [How much is council tax and what does it pay for?](https://whereyourmoneygoes.co.uk/council-tax/)
- [How is each figure on this site worked out?](https://whereyourmoneygoes.co.uk/methodology/)

## More from this publisher

- [UK tax calculators](https://howlongisit.co.uk)

Published by [Tekstak Ltd](https://tek-stak.co.uk). Our words, analysis, charts and derived calculations: CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/), credit [Tekstak Ltd](https://tek-stak.co.uk). The figures belong to the publishers listed under Sources and are used under their licences. Figures last updated 29 September 2026.