Inheritance Tax Calculator
Estimate the Inheritance Tax on an estate — nil rate bands, the residence allowance and its £2m taper, transferred spouse allowances, lifetime gifts with taper relief, and charity exemptions.
The Estate
Everything owned at death (property, savings, investments, possessions) minus debts and funeral costs.
Value of the main residence (or the deceased's share) left to direct descendants — unlocks the £175,000 residence nil rate band.
Fully exempt from Inheritance Tax (UK-domiciled spouse/civil partner).
Charity legacies are exempt — and 10%+ of the net estate cuts the rate on the rest from 40% to 36%.
Unused percentage of a late spouse's £325,000 band. 100% doubles the threshold to £650,000.
Unused percentage of a late spouse's £175,000 residence band.
Total chargeable gifts (after exemptions like the £3,000 annual exemption). These use the nil rate band before the estate does.
2025/26 thresholds: nil rate band £325,000 (frozen to April 2031), residence nil rate band £175,000 (frozen to April 2030). Identical in 2026/27.
Results
Total Inheritance Tax
At 40% on £250,000
Tax-Free Threshold
NRB £325,000 + RNRB £175,000
Chargeable Estate
Taxed at 40%
Passes to Beneficiaries
Estate minus Inheritance Tax
Effective Rate
Of estate plus gifts
Business and agricultural property relief are not modelled. From 6 April 2026, 100% relief is capped at a £2.5 million allowance per estate (raised from the originally announced £1 million), with 50% relief — an effective 20% rate — above it. Qualifying assets may significantly reduce the bill shown.
Guide & Information
Overview
Understanding Inheritance Tax Calculator is essential for financial planning in United Kingdom. This calculator simplifies complex tax calculations.
💡 Tips
- •Keep all relevant documents organized
- •Calculate regularly to avoid surprises
- •Consider consulting a tax professional for complex situations
Why Use This Inheritance Tax Calculator
Accurate tax calculation helps you avoid penalties and optimize your financial situation.
United Kingdom Regulations
This calculator follows current United Kingdom regulations and is updated regularly to reflect changes in legislation. All calculations comply with HMRC requirements.
Regulations: Complies with current United Kingdom regulations.
- • Example: Annual income of £50,000
- • Tax calculation includes federal and local rates
- • Deductions may apply based on family situation
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Frequently Asked Questions
How is Inheritance Tax Calculator calculated in United Kingdom?
The Inheritance Tax Calculator in United Kingdom is calculated based on current tax regulations. Input your values above to get an accurate calculation based on the latest rates and rules.
When do I need to pay Inheritance Tax Calculator?
Payment schedules vary based on your specific situation. This calculator helps you determine the amount owed and plan accordingly.
What documents do I need for Inheritance Tax Calculator?
Typically, you'll need income statements, previous tax returns, and relevant receipts. Use this calculator to estimate your obligation before filing.
Frequently asked questions
What is the Inheritance Tax threshold in 2025/26?
The nil rate band is £325,000 (frozen until April 2031). If a home passes to children, grandchildren or other direct descendants, the residence nil rate band adds up to £175,000 (frozen until April 2030), taking a single person to £500,000. A surviving spouse who inherits both unused allowances can pass on up to £1 million tax-free. Above the threshold, the standard rate is 40%.
How does the residence nil rate band taper work?
Estates worth more than £2 million lose £1 of residence nil rate band for every £2 over. A single person’s £175,000 RNRB disappears entirely at £2.35 million; a couple’s combined £350,000 is gone by £2.7 million on the second death. The band is also capped at the value of the home actually left to direct descendants.
How does the 7-year rule on gifts work?
Gifts made more than 7 years before death are free of Inheritance Tax. Gifts within 7 years use up the nil rate band before the estate does. If the gifts themselves exceed £325,000, the recipients pay tax on the excess at tapered rates: 40% within 3 years of death, 32% (3–4 years), 24% (4–5), 16% (5–6) and 8% (6–7). Taper relief reduces the tax, not the value, so gifts within the nil rate band gain nothing from it.
How do I qualify for the reduced 36% rate?
Leave at least 10% of the “baseline” estate (roughly the estate after deducting the nil rate band but before the charity legacy) to charity. The charitable gift itself is exempt, and everything else is then taxed at 36% instead of 40%. For estates already giving something to charity, topping up to the 10% threshold often costs other beneficiaries very little.
Do spouses pay Inheritance Tax?
No — anything left to a UK-domiciled spouse or civil partner is fully exempt, regardless of amount. Whatever percentage of the £325,000 nil rate band and £175,000 residence nil rate band the first spouse leaves unused transfers to the survivor’s estate, which is why married couples can often pass on up to £1 million in total.
What changed for farms and family businesses in April 2026?
From 6 April 2026 (Finance Act 2026), 100% agricultural and business property relief is capped at a £2.5 million allowance per estate — raised from the £1 million originally announced — with 50% relief (an effective 20% tax rate) on qualifying assets above it. The allowance is transferable between spouses, so couples can shelter up to £5 million of qualifying assets. This calculator notes but does not compute these reliefs.