Inheritance Tax and Probate: What’s Changed for Property in 2026?

Inheritance tax rules have changed in 2026, with further changes to pensions coming in 2027. For homeowners, families and anyone dealing with an inherited property, here’s what has changed, what’s still to come and what it could mean for an estate.

Inheritance Tax (IHT) can have a significant bearing on what someone leaves behind, particularly when a property makes up a large part of their estate. While the main tax thresholds remain unchanged, several important changes have been introduced in 2026, affecting certain landowners, business owners and families planning for the future.

Understanding the rules can help when considering an inheritance, arranging a property valuation or dealing with the sale of an inherited home.

Inheritance Tax thresholds: frozen until 2031

The standard Inheritance Tax nil-rate band remains £325,000 per person. This is the amount an individual can generally leave before IHT becomes payable, subject to any applicable exemptions and reliefs.

There is also a residence nil-rate band of up to £175,000 where a qualifying home is passed to direct descendants, such as children or grandchildren.

This means an individual may be able to pass on up to £500,000 without paying IHT. For married couples and civil partners, unused allowances can usually be transferred to the surviving partner, potentially allowing a qualifying estate to pass on up to £1 million tax-free.

However, the residence nil-rate band is subject to conditions and begins to reduce when an estate is worth more than £2 million.

Both thresholds are frozen until 5 April 2031. This means that as property prices and other assets increase in value, more estates may become liable for IHT even though the tax thresholds themselves have not changed.

The standard IHT rate remains 40% on the taxable amount above the available allowances, reducing to 36% where at least 10% of the estate is left to charity.

Changes to Agricultural and Business Property Relief

One of the most significant changes to take effect in 2026 concerns Agricultural Property Relief (APR) and Business Property Relief (BPR).

Previously, qualifying agricultural and business assets could receive 100% relief without the new monetary cap. From 6 April 2026, a combined allowance of £2.5 million applies to qualifying assets eligible for 100% relief.

Where qualifying assets exceed this allowance, the excess will generally receive 50% relief instead. This means that, where the remaining value is subject to the standard 40% IHT rate, the effective rate on that excess can be 20%.

Any unused portion of the £2.5 million allowance can be transferred to a surviving spouse or civil partner, potentially giving a couple up to £5 million of qualifying assets eligible for 100% relief between them.

Importantly, these reliefs only apply to assets meeting specific qualifying conditions. The changes are particularly relevant to farming families and business owners who hold agricultural land, property or business assets as part of their estate. They do not change the IHT treatment of an ordinary residential property simply because it is inherited.

Pension changes coming in April 2027

Another significant change is due to take effect on 6 April 2027.

From this date, most unused pension funds and pension death benefits will be included in the value of an individual’s estate for IHT purposes. Previously, many pension funds could generally be passed on outside the estate for IHT purposes.

There are some exceptions, including death-in-service benefits from registered pension schemes, so the change will not affect every pension arrangement in the same way.

The legislation has been passed, but further guidance on how the new rules will operate is still being developed. Anyone making longer-term estate plans may wish to review how their pension arrangements fit into their wider financial position.

Probate: what has changed in 2026?

Probate is the legal process of obtaining authority to deal with someone’s estate after they die. Where there is a property involved, it is often an important step before ownership can be transferred or a sale completed.

Since 13 July 2026, the probate application fee in England and Wales has increased from £300 to £526 for estates valued above £5,000. There is no application fee for estates valued at £5,000 or less.

Additional copies of the grant cost £2 each when ordered with the application, increasing to £16 each if ordered later.

The paperwork involved will depend on the circumstances and value of the estate. Some straightforward estates qualify as ‘excepted estates’ and follow a simpler reporting process. Others require a full Inheritance Tax account using Form IHT400, which must be submitted to HMRC before applying for probate.

Where a full IHT account is required, executors usually need to start paying any tax due and wait for HMRC to issue a code confirming the necessary details have been received. This usually takes around 20 working days after HMRC receives the IHT400 or the IHT payment, whichever is later.

Inheritance Tax is generally due before probate can be granted, although certain assets, including property, may qualify for payment by instalments. This can be particularly relevant where an estate includes a home that needs to be sold to release funds.

For families dealing with an inherited property, it is worth considering the probate process early. A property can often be marketed while the paperwork is progressing, but completion will generally need to wait until the necessary legal authority is in place.

Selling an inherited property

Inheriting a property can involve more than simply deciding whether to keep or sell it. Its value may affect the overall estate, the amount of IHT payable and the practical arrangements for distributing the inheritance.

An accurate property valuation can therefore be an important part of understanding the estate’s position. Executors may need a professional valuation for probate purposes, while families considering a sale will also want to understand the property’s likely market value.

The rules surrounding Inheritance Tax and probate can be complex, and the right approach will depend on the individual circumstances of the estate. A solicitor or qualified tax adviser can provide guidance on the relevant obligations and any tax due.

This article reflects the position as at November 2026. It is intended as general information, not legal or tax advice.