UK Inheritance Tax (IHT) Calculator — 2026
UK Inheritance Tax is charged at 40% on estates above the £325,000 Nil-Rate Band, plus the £175,000 Residence Nil-Rate Band if your main home passes to direct descendants. Married couples can combine bands up to £1,000,000. The rate drops to 36% if 10%+ of the estate goes to charity. Use this calculator to estimate IHT liability.
Estimate your IHT liability
How to Use This UK IHT Calculator
- Enter your total estate value — all assets at death: property, savings, investments, pensions held outside qualifying pension wrappers, businesses (subject to BPR), personal effects.
- Enter your main home value if it will pass to direct descendants (children, grandchildren, step-children, adopted, fostered children). Only this amount qualifies for the Residence Nil-Rate Band.
- Enter % of NRB+RNRB transferred from a deceased spouse. If your spouse died without using any of their bands, transfer 100%. If they used part, transfer the unused percentage.
- Enter any charity bequest. If charity receives 10%+ of your taxable estate, IHT rate drops from 40% to 36% on the remainder.
- Enter gifts in last 7 years beyond annual exemptions (£3,000/year). Gifts within 7 years of death may be added back into the taxable estate.
UK IHT Formula and Method
Inheritance Tax calculation for the 2026/27 tax year:
- Step 1 — Available NRB. £325,000 standard. If your spouse predeceased you and left unused NRB, the unused % transfers to you (max 100% transfer = £650,000 combined).
- Step 2 — Available RNRB. £175,000 if your main home passes to direct descendants. Capped at the home's value. If your estate exceeds £2 million, RNRB reduces by £1 for every £2 over (so £2.35 million estate has RNRB fully tapered to zero). Transferable from spouse up to 100%.
- Step 3 — Add 7-year gifts. Gifts made in the 7 years before death are added back. Gifts made 3+ years before death receive taper relief reducing the IHT rate on them.
- Step 4 — Subtract charitable bequests. Charity gifts are exempt from IHT entirely.
- Step 5 — Calculate tax. Apply 40% to the taxable amount above NRB+RNRB. If charity ≥10% of "baseline amount", apply 36% instead.
Worked Example — Single Person, £800k Estate
Margaret is widowed, owns a £500,000 home she leaves to her daughter, and has £300,000 in investments. No gifts made, no charity bequest.
- Estate total: £800,000.
- Available NRB: £325,000.
- Available RNRB: £175,000 (home value covers it).
- Total allowance: £500,000.
- Taxable: £800,000 − £500,000 = £300,000.
- IHT at 40%: £120,000.
- Estate after IHT: £680,000.
Worked Example — Married Couple Transferring Bands
James dies in 2026 leaving a £1,200,000 estate to his wife Helen. No IHT on transfer to spouse. Helen later dies in 2030. James's full £325k NRB and £175k RNRB transfer to Helen.
- Helen's estate: £1,200,000 (let's assume £600k is the home, going to children).
- Helen's NRB: £325,000 + transferred £325,000 = £650,000.
- Helen's RNRB: £175,000 + transferred £175,000 = £350,000 (capped at home value £600k, so full £350k available).
- Total allowance: £1,000,000.
- Taxable: £1,200,000 − £1,000,000 = £200,000.
- IHT at 40%: £80,000.
- Estate after IHT: £1,120,000 passes to descendants.
UK IHT Reference Table — 2026/27
| Item | Amount / Rule |
|---|---|
| Nil-Rate Band (NRB) | £325,000 (frozen until April 2028) |
| Residence Nil-Rate Band (RNRB) | £175,000 (frozen until April 2028) |
| Couple's combined maximum | £1,000,000 |
| Standard IHT rate | 40% above allowance |
| Reduced rate (charity ≥10%) | 36% above allowance |
| RNRB taper threshold | £2,000,000 estate (− £1 per £2 over) |
| Spouse exemption | Unlimited transfers between spouses |
| Annual gift exemption | £3,000 (can carry forward 1 yr) |
| Small gift exemption | £250 per recipient per year |
| 7-year gift rule | Gifts in 7 years before death added back |
| Taper relief on gifts | 3–4 yrs: 32%; 4–5: 24%; 5–6: 16%; 6–7: 8% IHT on excess gift |
Common IHT Scenarios
Family home above the RNRB
If your home is worth £500,000 and you pass it to children, you can use the full £175,000 RNRB. The remaining £325,000 of the home value is shielded by the standard NRB. Total: £500,000 tax-free if no other estate; plus the NRB also shelters other estate up to £325,000.
Estate above £2 million
RNRB tapers £1 for every £2 above £2 million. At £2,350,000+, RNRB is fully tapered to zero. Strategies include lifetime gifts to reduce estate, life insurance written into trust, or charitable giving to reduce taxable estate below £2M.
10% charity bequest reduces rate
Bequeathing 10%+ of your "baseline amount" (estate after NRB+RNRB) to charity reduces the IHT rate from 40% to 36% on the remainder. On a £500,000 taxable estate: gifting £50,000 (10%) to charity saves £18,000 in tax (£450,000 × 4% reduction) — making the net cost of giving £50k just £32k.
Gifts and the 7-year rule
Outright gifts (Potentially Exempt Transfers) escape IHT if you survive 7 years. Survive 3–7 years and taper relief reduces the IHT rate on the gift in steps. Each £3,000 annual exemption + small gift exemptions reduce the gift's IHT-relevant value.
Pensions and IHT
Most defined-contribution pensions sit outside the estate for IHT — they can be passed to nominated beneficiaries free of IHT. After death before age 75, beneficiaries receive income tax-free; after age 75 they pay income tax on withdrawals. Note: pensions are scheduled to enter the IHT net from April 2027 under proposed reforms.
Business Property Relief (BPR)
Qualifying business assets (unquoted trading company shares, sole-trader assets) attract 100% or 50% relief from IHT after 2 years of ownership. AIM-listed share portfolios held 2+ years typically attract 100% BPR — a common estate-planning tool.
Tips and Considerations
- Make a will. Intestacy rules can deliver assets to people you didn't intend, including disinheriting unmarried partners. A simple will is the cheapest IHT planning tool you'll buy.
- Use the £3,000 annual exemption. Each year of unused gift allowance is lost (can roll forward one year only).
- Spouse exemption is unlimited. Transfers between UK-domiciled spouses are IHT-free with no cap.
- Plan gifts early. The 7-year clock starts on the gift date. Gifts before age 70–73 are more likely to fall outside the 7-year window.
- Life insurance in trust. Policies paid into trust at death are not part of your estate and can fund the IHT bill without forcing asset sales.
- RNRB requires the right beneficiaries. Direct descendants only: children, grandchildren, step-children. Nieces/nephews don't qualify. Trust structures can lose RNRB if not drafted correctly.
- This is a YMYL topic. Get qualified UK tax/legal advice (STEP-qualified solicitor or chartered tax adviser) before making large gifts or restructuring assets.
Related Calculators
- UK Income Tax Calculator
- UK Pension Calculator
- ISA Allowance Calculator
- Stamp Duty Calculator UK
- UK National Insurance Calculator
Sources & References
- gov.uk — Inheritance Tax
- gov.uk — Residence Nil-Rate Band
- gov.uk — IHT on gifts
- HMRC Inheritance Tax Manual (IHTM)
Frequently Asked Questions
When is UK Inheritance Tax payable?
On estates above the Nil-Rate Band (£325,000) plus Residence Nil-Rate Band (£175,000, if applicable). The standard rate is 40% above the combined allowance. Married couples can transfer unused allowances, up to £1,000,000 combined.
What is the Residence Nil-Rate Band?
An extra £175,000 IHT allowance when your main residence passes to direct descendants (children, grandchildren, step-children). Capped at the home's actual value. Tapers above £2 million estates.
How does the 7-year rule work?
Outright gifts during your lifetime fall outside your estate for IHT if you survive 7 years. If you die within 7 years, the gift is added back. Gifts 3+ years before death receive taper relief reducing the IHT rate progressively.
Do I pay IHT on my pension?
Currently, most defined-contribution pensions are outside the IHT estate and can pass tax-free to nominated beneficiaries (income tax may apply on withdrawal). Note: the government has announced plans to bring pensions into the IHT net from April 2027 — verify rules before relying on this exemption.
Can I avoid IHT by giving everything away?
Outright gifts that survive 7 years escape IHT. But you cannot retain "benefit" from gifted assets — giving away your home while continuing to live there triggers "gift with reservation of benefit" rules and the home stays in your estate.
How does charity bequest reduce IHT?
Bequeathing 10%+ of your "baseline amount" (taxable estate after NRB+RNRB) to charity drops IHT rate from 40% to 36%. This often makes the net cost of giving lower than people expect.
What if my estate is above £2 million?
The Residence Nil-Rate Band tapers by £1 for every £2 over £2 million. Above £2.35 million, RNRB is fully lost. Strategies include lifetime gifts, life insurance in trust, or charitable giving to bring the estate below £2M.
Do spouses pay IHT on inheritance from each other?
No — transfers between UK-domiciled spouses are unlimited and IHT-free. Each spouse's unused NRB and RNRB transfer to the survivor and can be used on the survivor's death.
When is IHT actually due?
IHT must be paid by the end of the 6th month after death. For estates including illiquid assets like property or unquoted businesses, you can pay in 10 annual instalments — useful when the estate cannot easily generate the cash to pay the bill.
Are gifts to charity always IHT-free?
Yes — bequests to UK-registered charities are fully exempt from IHT regardless of size. Lifetime charitable gifts also qualify for income tax relief (Gift Aid + higher-rate relief on Self Assessment).
Last reviewed: 18 May 2026. Allowances and rules verified against gov.uk for the 2026/27 tax year. Important: Inheritance tax planning is a complex area requiring qualified UK tax and legal advice (STEP solicitor or chartered tax adviser). This calculator is an estimate and does not constitute financial or legal advice.