How Much Inheritance Tax Will Be Due? Calculate IHT on estates, property and gifts.
Effective rate on full estate: —
Inheritance tax (IHT) is a tax on the estate — the property, money and possessions — of someone who has died. It is paid by the estate before assets are distributed to beneficiaries. In most cases, the executor or administrator of the estate arranges payment to HMRC before probate is granted.
IHT is only payable on the portion of the estate that exceeds the available tax-free threshold (the nil-rate band). For most people, the combination of the nil-rate band, the Residence Nil Rate Band, and the spouse exemption means IHT is never due. HMRC estimates that IHT affects fewer than 5% of UK estates each year.
Despite its relatively narrow reach, IHT generates significant public concern — particularly as rising property values push more estates over the threshold. The nil-rate band has been frozen at £325,000 since 2009 and is set to remain frozen until at least 2030.
IHT in the UK is charged at a flat rate on the portion of an estate above the available threshold. The main rules for 2026/27 are:
| Allowance / Rate | Amount | Notes |
|---|---|---|
| Nil Rate Band (NRB) | £325,000 | Per person — frozen to 2030 |
| Residence Nil Rate Band (RNRB) | £175,000 | Family home to direct descendants |
| Max combined threshold (single) | £500,000 | NRB + RNRB |
| Max combined threshold (widowed) | £1,000,000 | 2× NRB + 2× RNRB transferred |
| Standard IHT rate | 40% | On estate above threshold |
| Reduced charitable rate | 36% | If 10%+ of net estate donated to charity |
| Spouse / civil partner exemption | Unlimited | Assets to surviving spouse are fully exempt |
| RNRB taper threshold | £2,000,000 | RNRB reduces £1 for every £2 above this |
| Annual gift exemption | £3,000 | Per person, per year — always outside estate |
| Estate Value | Nil Rate Band | Taxable Amount | IHT at 40% |
|---|---|---|---|
| £325,000 | £325,000 | £0 | £0 |
| £500,000 | £325,000 | £175,000 | £70,000 |
| £750,000 | £325,000 | £425,000 | £170,000 |
| £1,000,000 | £325,000 | £675,000 | £270,000 |
| £1,500,000 | £325,000 | £1,175,000 | £470,000 |
| £2,000,000 | £325,000 | £1,675,000 | £670,000 |
This calculator estimates the inheritance tax due on a UK estate using the rules in force for 2026/27. Here is how each input affects the result:
This calculator produces an estimate. Actual IHT may differ due to trust assets, business relief, agricultural relief, or complex gift arrangements. Always consult a solicitor or financial adviser for estate planning decisions.
Margaret, 78, and Robert, 80, own a home worth £480,000 and have savings of £220,000 — combined estate £700,000. Margaret dies first, leaving everything to Robert.
First death (Margaret): Entire estate passes to Robert under the spouse exemption → IHT = £0. Margaret's full NRB (£325,000) and RNRB (£175,000) are unused and transfer to Robert.
Second death (Robert): Estate £700,000, home £480,000, children inherit. Two transferred bands selected.
| Estate value | £700,000 |
| Less: NRB (£325,000 × 2) | −£650,000 |
| Less: RNRB (£175,000 × 2 — both transferred) | −£350,000 |
| Available threshold | £1,000,000 |
| Taxable estate | £0 |
IHT due: £0. The full £1,000,000 threshold means even a £700,000 estate passes entirely to the children free of IHT.
Patricia is a widow. Her estate includes her family home (£520,000) and savings and investments of £180,000 — total £700,000. She has one transferred NRB from her late husband (his NRB was unused). Her children inherit the house.
| Estate value | £700,000 |
| Less: NRB (£325,000 + £325,000 transferred) | −£650,000 |
| Less: RNRB (own only — husband's RNRB not transferred) | −£175,000 |
| Available threshold | £825,000 |
| Taxable estate | £0 |
IHT due: £0. With the transferred NRB and her own RNRB, Patricia's £700,000 estate is fully within the £825,000 threshold.
If Patricia had not transferred her husband's NRB, the threshold would be £500,000 — and the taxable estate £200,000 → IHT of £80,000. Claiming the transfer is critical.
Richard is single and has never married. His estate comprises his home (£900,000) and investment portfolio (£1,700,000) — total £2,600,000. His children will inherit the property.
| Estate value | £2,600,000 |
| Less: NRB | −£325,000 |
| RNRB — before taper | £175,000 |
| Taper: £2.6M − £2M = £600k over threshold → reduce by £300,000 | |
| RNRB after taper | −£0 (fully tapered: £175k − £300k = £0) |
| Total threshold | £325,000 |
| Taxable estate | £2,275,000 |
| IHT at 40% | £910,000 |
IHT due: £910,000 — 35% of the entire estate. At this level, estate planning (trusts, lifetime gifting, pension structuring) can make a material difference. Professional advice is essential.
There is no obligation to minimise IHT, but several legitimate strategies can reduce the amount payable. Most require planning well in advance of death.
Assets passing to a surviving spouse or civil partner are fully exempt — there is no upper limit. Any unused nil-rate band from the first death also transfers to the survivor, effectively doubling the tax-free threshold on the second death.
Gifts made more than 7 years before death fall outside the estate completely. The annual gift exemption (£3,000 per year) is always outside the estate. Additional exemptions apply for wedding gifts, gifts from normal expenditure, and gifts to charities.
Leaving 10% or more of the net estate to registered charities reduces the IHT rate from 40% to 36%. In the right circumstances, this can mean more combined wealth passes to both charity and family than leaving nothing to charity.
Pension funds are currently outside the estate for IHT purposes, meaning undrawn pension wealth can be passed on free of IHT. The government announced changes taking effect from April 2027 that will bring pensions partially into scope — planning before that date may be worthwhile.
Business Property Relief (BPR) and Agricultural Property Relief (APR) can reduce or eliminate IHT on qualifying business assets and farmland. BPR provides 100% relief on shares in qualifying unquoted companies and 50% on listed shares with control.
Assets placed in certain trusts can be outside the estate after 7 years. Discretionary trusts, life interest trusts and bare trusts each work differently and have their own tax implications. Trust planning requires specialist legal advice and should not be undertaken without a solicitor.