UK Inheritance Tax Calculator 2026
Calculate how much inheritance tax (IHT) your estate will owe. See nil-rate bands, spouse exemptions, and what your beneficiaries will actually receive.
Your Estate Details
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Total estate: £500,000
Adds £175k RNRB to your tax-free allowance
💡 Estate Planning
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Your IHT Results
Inheritance Tax Due
£0
Based on your estate details
Gross Estate
£0
Tax-Free Allowance
£0
Taxable Amount
£0
Effective IHT Rate
0%
Beneficiaries Receive
£0
📊 Detailed IHT Breakdown
See exactly how your inheritance tax is calculated
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📚 Inheritance Tax Jargon Buster
Click on any term to learn more
Nil-Rate Band (NRB)
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The first £325,000 of your estate is tax-free. This threshold has been frozen since 2009. A surviving spouse/civil partner can inherit their partner's unused NRB, giving a potential £650,000 allowance.
Residence Nil-Rate Band (RNRB)
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An extra £175,000 allowance if you pass your main home to children or grandchildren. Transferable for married couples (up to £350,000). Tapers for estates over £2 million, reducing by £1 for every £2 above.
Spouse Exemption
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Everything left to a spouse or civil partner is completely exempt from IHT. On the first death, no tax is paid regardless of estate size. The deceased's unused NRB and RNRB transfer to the surviving partner.
7-Year Rule (PETs)
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Gifts made more than 7 years before death are tax-free. Gifts within 7 years are "Potentially Exempt Transfers" (PETs). Tax reduces with taper relief: 3-4 years (32% tax), 4-5 (24%), 5-6 (16%), 6-7 (8%).
Annual Gift Exemption
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You can give away £3,000 per year completely free of IHT. Unused allowance carries forward one year (max £6,000). Plus unlimited £250 small gifts to different people, and normal gifts from income.
Charitable Donations
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Gifts to charity in your will are fully exempt from IHT. If you leave at least 10% of your net estate to charity, the IHT rate drops from 40% to 36%. This can save your family significant tax.
Taper Relief
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Reduces IHT on gifts made 3-7 years before death. Only applies to gifts above the NRB. 3-4 years: 20% off, 4-5: 40% off, 5-6: 60% off, 6-7: 80% off, 7+: no tax. Doesn't reduce the value of the gift.
Business Property Relief (BPR)
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Qualifying business assets can receive 50% or 100% IHT relief. Includes unquoted company shares (100%), business/partnership interest (100%), quoted shares (50%). Must be owned 2+ years. AIM-listed shares often qualify.
Probate
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The legal process of administering a deceased person's estate. A Grant of Probate gives executors legal authority to deal with the estate. IHT must usually be paid before probate is granted (within 6 months of death).
Trusts & IHT
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Assets in trust may be outside your estate for IHT. Discretionary trusts have a 20% entry charge on amounts over NRB plus periodic charges. Life insurance trusts are common — pays out without adding to your estate.
Agricultural Property Relief
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Qualifying agricultural land and buildings can receive 50% or 100% IHT relief. Must be occupied for agricultural purposes for 2+ years (owner-occupied) or 7+ years (let). Includes farmhouses "of a character appropriate."
Paying IHT
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IHT must be paid within 6 months of death. Interest charged after that. IHT on property can be paid in 10 annual instalments. Executors are personally liable. Usually paid from estate funds before assets are distributed.
How UK Inheritance Tax Works
Inheritance tax is charged at 40% on the value of your estate above the nil-rate band when you die. Here's what you need to know:
Key IHT Thresholds for 2025/26
- Nil-Rate Band: First £325,000 is tax-free (£650,000 for married couples)
- Residence Nil-Rate Band: Extra £175,000 if passing home to children (£350,000 for couples)
- Maximum Tax-Free: Up to £1,000,000 for married couple leaving home to children
- IHT Rate: 40% on everything above your combined allowances
- Charity Rate: Reduced to 36% if leaving 10%+ of net estate to charity
Who Pays Inheritance Tax?
- Estates over £325,000 (or £500,000 with RNRB) may owe IHT
- Executors are responsible for calculating and paying IHT from the estate
- Beneficiaries receive their inheritance after IHT has been deducted
- Gifts within 7 years of death may also trigger IHT
Ways to Legally Reduce IHT
- Make gifts: Use annual £3,000 exemption and gift surplus income
- Leave to spouse: Unlimited spouse exemption on first death
- Leave home to children: Qualify for £175k RNRB
- Donate to charity: 10%+ donation cuts rate from 40% to 36%
- Use trusts: Discretionary trusts can protect assets
- Life insurance: Write policy into trust to pay IHT bill
- Business/agricultural relief: Qualifying assets get 50-100% relief
⚠️ Disclaimer: This calculator provides estimates based on 2025/26 IHT rules. Actual inheritance tax liability depends on specific circumstances including domicile, trusts, business property, and HMRC valuations. This is for guidance only and not legal or financial advice. Consult a qualified estate planner, solicitor, or tax advisor for personalised advice.