What is the nil rate band?
The nil rate band is the amount of an estate charged to inheritance tax at 0%. It is £325,000 for the 2026/27 tax year and has been at that level since April 2009. Value above it is generally taxed at 40%.
Any unused proportion transfers to a surviving spouse or civil partner, so a couple can have up to £650,000 of nil rate band between them. The transfer is claimed on the second death and is expressed as a percentage of the band unused on the first — so it uprates automatically if the band ever rises.
It is reduced by chargeable lifetime transfers made in the seven years before death, which are set against it first. This is why large gifts made shortly before death can push the estate into tax even though the gift itself was modest.
The claim is not automatic. HMRC does not volunteer it, and the deadline for claiming the transferable band is limited. It is frozen until April 2031, which means fiscal drag continues to pull ordinary estates into charge.