Inheritance Tax thresholds, interest rates and HMRC’s forms change from time to time. When they do, we update the rules the software uses, with tests, and record the change here with its source.
The rules in use today are version 2026-10-05.1, checked on 5 October 2026.
Coming into force · from 6 April 2027
Unused pensions count towards the estate for deaths from 6 April 2027
Finance Act 2026 (sections 66 to 71) brings most unused pension funds and death benefits into the value of a person’s estate for deaths on or after 6 April 2027. Personal representatives will report them, work out the tax that relates to each pension scheme and pay it, and can ask schemes to hold back benefits or pay the tax directly. As of 5 October 2026 HMRC has not published the forms for this or its method for sharing the tax between the estate and the schemes.
What it means here
Our pensions module stays switched off until HMRC publishes the final forms. Until then we cannot prepare a pack for a death on or after 6 April 2027 that involves unused pension funds, and the free check says so before you pay.
The residence nil rate band does not make an estate excepted
HMRC’s Trusts and Estates Newsletter for August 2026 says that the residence nil rate band, and any amount brought forward from a husband, wife or civil partner who died first, must not be taken into account when deciding whether an estate is an excepted estate. An estate that would only avoid tax because of the residence nil rate band needs a full IHT400 to claim it.
What it means here
The free check never uses the residence nil rate band to decide whether an IHT400 is needed.
Charity exemption: trusts merely held for charitable purposes no longer qualify
For deaths on or after 6 April 2026, property that is only held on trust for charitable purposes no longer qualifies for the charity exemption (Finance Act 2026, section 78). Gifts to charities themselves are exempt as before.
What it means here
Legacies to charities in a will are treated as exempt, as before. If a will leaves property on trust for charitable purposes instead, the exemption may not apply for deaths from 6 April 2026; this is a point to check with a professional.
Business and agricultural property relief reformed
From 6 April 2026, the 100% rate of business and agricultural property relief applies to the first £2.5 million of qualifying property in an estate, and 50% to the rest. Any unused part of the £2.5 million allowance can pass to a surviving spouse or civil partner (Schedule IHT437).
What it means here
Estates claiming business or agricultural relief are outside what EstateTally covers. The free check tells you so before you pay, so that you can get professional help.
Finance Act 2026, section 72 (Royal Assent 18 March 2026), keeps the nil rate band at £325,000, the residence nil rate band at £175,000 and the £2,000,000 taper threshold at their current levels for one more tax year, until 5 April 2031. GOV.UK’s thresholds table still shows the residence nil rate band ending on 5 April 2030; the Act extends it.
What it means here
Our rules use £325,000, £175,000 and £2,000,000 for deaths up to 5 April 2031.
HMRC’s interest rate on Inheritance Tax paid late went down from 8.00% to 7.75% a year from 9 January 2026, after the Bank of England reduced Bank Rate to 3.75% on 18 December 2025. Interest on tax repaid by HMRC is 2.75%. HMRC’s “Rates and tables” sheet for the IHT400 (dated August 2025) still shows 8%; the later rate applies.
What it means here
Our interest calculations use 7.75% from 9 January 2026 and the earlier rates for earlier periods.
From 6 April 2025 the interest rate on unpaid Inheritance Tax became Bank Rate plus 4%, up from Bank Rate plus 2.5% (The Taxes and Duties, etc (Interest Rate) (Amendment) Regulations 2025). At that time the rate rose from 7.00% to 8.50%.
What it means here
Interest for periods from 6 April 2025 uses Bank Rate plus 4%.
For deaths on or after 6 April 2025, whether property abroad is within Inheritance Tax depends on whether the person was a long-term UK resident — UK resident for at least 10 of the 20 tax years before the year of death (Inheritance Tax Act 1984, section 6A) — instead of on their domicile. The IHT400 asks about this at box 6b.
What it means here
For deaths from 6 April 2025 the free check asks about long-term UK residence. Estates of people who were not long-term UK residents are outside what we cover.
Excepted estates: higher limits and simpler reporting
For deaths on or after 1 January 2022 (SI 2021/1167), an estate worth up to £3,000,000 can be excepted — no IHT400 needed — when everything above the nil rate band passes to a spouse, civil partner or charity, and gifts in the 7 years before death can total up to £250,000 (previously £1,000,000 and £150,000). Excepted estates report their values on the probate application instead.
What it means here
EstateTally covers deaths from 1 January 2022, and the free check applies these rules.