Inheritance Tax on £5,000,000 Estate | 2026/27
Based on 2026/27 rates, an estate of £5,000,000 would incur approximately £1,870,000 in UK inheritance tax, payable on the taxable amount of £4,675,000.
IHT Breakdown — £5,000,000 Estate
| Total estate value | £5,000,000 |
| Nil rate band | £325,000 |
| Residence nil rate band | £0 |
| Total tax-free allowances | £325,000 |
| Taxable amount | £4,675,000 |
| Inheritance tax due (40%) | £1,870,000 |
| Estate after IHT | £3,130,000 |
Estate Planning Insights
- The Residence Nil Rate Band taper reduces your RNRB allowance by £1 for every £2 above the £2,000,000 threshold. Your available RNRB is £0.
- Leaving 10% or more of the estate to charity reduces the IHT rate from 40% to 36%, potentially saving £187,000.
- Sophisticated strategies such as family investment companies, discounted gift trusts, and EIS/VCT investments may be appropriate. Professional advice is essential.
Frequently Asked Questions
How much inheritance tax on a £5,000,000 estate?
For 2026/27, an estate of £5,000,000 would incur approximately £1,870,000 in inheritance tax, calculated at 40% on the taxable amount of £4,675,000 above the available allowances of £325,000.
When must inheritance tax be paid?
Inheritance tax must be paid within 6 months of the date of death. Interest is charged on late payments. Property can be paid in instalments over 10 years, though interest still accrues.
What allowances reduce inheritance tax?
The nil rate band (£325,000) applies to all estates. The Residence Nil Rate Band (£175,000) is available when leaving your home to direct descendants. Transferred allowances from a deceased spouse can double these figures.
How can I reduce inheritance tax on this estate?
Key strategies include the seven-year gifting rule, annual gift allowances (£3,000 per year), charitable donations, pension contributions, Business Property Relief, and trusts. A qualified estate planning solicitor can create a tailored strategy.