Estimate UK inheritance tax with nil-rate bands, residence relief, and taper.
This calculator provides estimates for guidance only. It does not constitute financial advice. IHT thresholds and rates may change. Always verify with HMRC or a qualified tax adviser.
Inheritance Tax (IHT) is a UK tax on the estate of someone who has died. It is charged at 40% on the value of the estate above the tax-free threshold, known as the nil-rate band (NRB), which has been frozen at GBP 325,000 since 2009. An additional residence nil-rate band (RNRB) of GBP 175,000 is available when a main residence is left to direct descendants such as children or grandchildren. For married couples and civil partners, unused nil-rate bands can be transferred to the surviving partner, potentially giving a combined threshold of up to GBP 1,000,000 before any IHT is due. However, for larger estates worth over GBP 2,000,000, the RNRB is gradually tapered away, reducing the available threshold. IHT is often called the most avoidable tax because careful estate planning can significantly reduce the liability. This calculator helps you estimate the IHT due on an estate using 2026-27 thresholds, including the RNRB taper mechanism, spouse transfers, and the reduced rate for charitable estates.
To estimate inheritance tax on an estate: 1. Enter the total estate value. This includes property, savings, investments, pensions (from April 2027), personal possessions, and any gifts made within seven years of death. Debts and funeral expenses can be deducted from the estate value before entering it. 2. Indicate whether the estate includes a main residence. The residence nil-rate band (RNRB) of GBP 175,000 is only available when the estate includes a home that was the deceased's residence at some point. 3. Indicate whether the estate is left to direct descendants. The RNRB requires the residence to pass to children, grandchildren, or other direct descendants (including adopted children and stepchildren). Leaving the residence to a sibling, friend, or trust does not qualify. 4. Select whether the spouse's nil-rate band is being transferred. If a spouse or civil partner died previously and did not use their full NRB and RNRB, the unused portion can be transferred, effectively doubling both allowances. 5. Indicate whether 10% or more of the estate is left to charity. This qualifies the estate for the reduced IHT rate of 36% instead of the standard 40%. 6. Review the results showing the IHT liability, effective rate, and breakdown of the available thresholds.
IHT is calculated by comparing the total estate value against the available tax-free thresholds. For example, for a GBP 500,000 estate with a residence left to children (no spouse transfer): - Nil-rate band (NRB) = GBP 325,000 - Residence nil-rate band (RNRB) = GBP 175,000 - Total threshold = GBP 500,000 - Taxable estate = GBP 500,000 - GBP 500,000 = GBP 0 - IHT = GBP 0 For a GBP 2,500,000 estate with a residence left to children: - NRB = GBP 325,000 - Base RNRB = GBP 175,000 - RNRB taper: estate exceeds GBP 2,000,000 by GBP 500,000 - Taper reduction = GBP 500,000 / 2 = GBP 250,000 - Tapered RNRB = max(GBP 175,000 - GBP 250,000, GBP 0) = GBP 0 - Total threshold = GBP 325,000 - Taxable estate = GBP 2,500,000 - GBP 325,000 = GBP 2,175,000 - IHT = GBP 2,175,000 x 40% = GBP 870,000 With spouse transfer, both the NRB and RNRB can be doubled: up to GBP 650,000 NRB and GBP 350,000 RNRB, giving a maximum threshold of GBP 1,000,000.
Gifts made during a person's lifetime may also be subject to IHT if the person dies within seven years. Gifts made 3-7 years before death benefit from taper relief, which reduces the IHT rate on those gifts. Gifts to spouses, charities, and political parties are exempt. Each person also has an annual gift exemption of GBP 3,000 and can make small gifts of up to GBP 250 per recipient. The nil-rate band has been frozen at GBP 325,000 since 2009 and is expected to remain frozen until at least 2028. The RNRB of GBP 175,000 has similarly been frozen. This means that as property values rise, more estates are brought into the IHT net each year. IHT is paid by the estate executor before assets can be distributed to beneficiaries. It is usually due within six months of the end of the month of death. For estates that include property, it may be possible to pay IHT in instalments over 10 years. Life insurance policies written in trust are a common planning tool to ensure beneficiaries have funds to cover any IHT liability without having to sell estate assets. Professional advice from a qualified estate planner or solicitor is recommended for complex estates.