IHT and the Family Home — A Practical Planning Guide for 2026

The Family Home and IHT — Why It Matters

For most UK families, the home is the single largest asset in any estate. With the nil rate band frozen at £325,000 until at least 2030 and average house prices well above that in many parts of England, a large proportion of homeowners now face a potential IHT bill when they die.

The combination of the standard nil rate band (£325,000) and the residence nil rate band (£175,000) means a single homeowner can leave up to £500,000 to direct descendants free of IHT — and a married couple up to £1,000,000. But estates above these thresholds face a 40% charge on the excess.

Use our [Inheritance Tax Calculator](/inheritance-tax-calculator) to see where your estate currently stands.

Scenario 1 — Leaving the Home to Children in a Will

The simplest approach is to ensure your will leaves the main residence directly to your children or other direct descendants, so that the RNRB (£175,000) is available. If the home is left to a sibling, niece, nephew or unmarried partner instead, the RNRB is lost entirely.

Many older wills pre-date the RNRB (introduced in 2017) and may include legacy trust provisions — such as nil rate band discretionary trusts — that were effective for their time but may now interact adversely with the RNRB. A will review is advisable for anyone who has not updated their will since 2017.

Scenario 2 — Surviving Spouse Owns the Home

When the first spouse dies and leaves everything to the survivor, both the NRB and RNRB transfer to the survivor's estate. On the survivor's death, the combined thresholds (up to £1,000,000) are available — provided the home is left to direct descendants.

The practical implication: the surviving spouse should update their will to ensure the home and the majority of the estate passes to children rather than, say, to siblings or charities (which would forfeit the RNRB and the charitable rate benefit respectively — careful drafting is required if charitable giving is intended alongside RNRB).

Scenario 3 — The Estate Exceeds £2 Million

The RNRB is tapered away for estates worth more than £2,000,000. Professional advice is essential at this level. Strategies include lifetime gifting (including gifts of cash or other assets to bring the estate below the £2 million threshold), family investment companies, and business or agricultural property relief where applicable.

The Deed of Variation — Fixing a Will After Death

A **deed of variation** (sometimes called a deed of family arrangement) allows beneficiaries of an estate to redirect their inheritance to someone else within **two years** of the date of death. For IHT purposes, HMRC treats the redirection as if it had been made by the deceased in their will.

This is a powerful post-death planning tool. Common uses include:

• Redirecting assets to grandchildren to use the deceased's NRB efficiently
• Skipping a generation where the inheriting child does not need the money
• Making charitable legacies to qualify for the 36% reduced IHT rate
• Correcting a will that inadvertently disqualifies the RNRB

All affected beneficiaries must consent to the variation. The deed must be in writing and signed by all varying beneficiaries. The executors must also agree if IHT is involved.

When to Take Professional Advice

IHT planning is not a DIY exercise for larger estates. You should consult a solicitor or financial adviser if:

• Your estate (including pension funds from April 2027) is likely to exceed £500,000 as a single person, or £1,000,000 as a couple
• You own property abroad
• You have complex family arrangements (e.g. children from more than one relationship)
• You own a business or agricultural property
• Your will has not been reviewed since 2017

Early planning — ideally a decade or more before death — gives the greatest flexibility and the longest runway for lifetime gifting strategies to take effect.