Inheritance Tax Calculator
Estimate UK Inheritance Tax using 2026/27 nil-rate bands, residence nil-rate band, and spouse exemptions with a full threshold breakdown.
For informational purposes only. Not financial advice. Calculations are estimates and may not reflect your exact situation. Consult a qualified financial adviser for personalised guidance.
About Inheritance Tax Calculator
Estimate the Inheritance Tax (IHT) due on a UK estate for 2026/27. Enter the estate value, select your circumstances (single, married, leaving home to children), and see a full breakdown of available allowances, taxable amount, and tax owed at 40%.
2026/27 IHT Thresholds and Rates
| Allowance | Per Person | Couple (Transferable) | Conditions |
|---|---|---|---|
| Nil-Rate Band (NRB) | £325,000 | £650,000 | Available to all estates |
| Residence Nil-Rate Band (RNRB) | £175,000 | £350,000 | Home left to direct descendants |
| Combined maximum | £500,000 | £1,000,000 | NRB + RNRB |
Everything above the available threshold is taxed at 40%. If 10% or more of the net estate is left to charity, the rate drops to 36%.
The NRB has been frozen at £325,000 since 2009 and is confirmed frozen until at least 2028.
How IHT Is Calculated
Worked example (single person, £600,000 estate, home left to children):
- NRB: £325,000
- RNRB: £175,000 (home going to children)
- Total threshold: £500,000
- Taxable: £600,000 - £500,000 = £100,000
- IHT: £100,000 x 40% = £40,000
Worked example (married couple, £1,200,000 estate, home to children):
- Combined NRB: £650,000
- Combined RNRB: £350,000
- Total threshold: £1,000,000
- Taxable: £1,200,000 - £1,000,000 = £200,000
- IHT: £200,000 x 40% = £80,000
The RNRB Taper
Estates worth over £2,000,000 lose RNRB at a rate of £1 for every £2 above the threshold:
| Estate Value | RNRB (Single) | RNRB (Couple) |
|---|---|---|
| Under £2,000,000 | £175,000 | £350,000 |
| £2,100,000 | £125,000 | £300,000 |
| £2,200,000 | £75,000 | £250,000 |
| £2,350,000 | £0 | £175,000 |
| £2,700,000 | £0 | £0 |
Spouse Exemption
Transfers between married couples and civil partners are completely exempt from IHT, regardless of amount. When the first spouse dies, any unused NRB and RNRB passes to the surviving spouse. This is why a married couple can have up to £1,000,000 of combined allowances even if the first spouse left everything to the survivor.
The 7-Year Gift Rule
Gifts made during your lifetime become IHT-free if you survive 7 years. Gifts within 7 years of death may use taper relief:
| Years Before Death | Tax Rate on Gift (if above NRB) |
|---|---|
| 0 - 3 years | 40% |
| 3 - 4 years | 32% |
| 4 - 5 years | 24% |
| 5 - 6 years | 16% |
| 6 - 7 years | 8% |
| 7+ years | 0% (exempt) |
Annual exemptions also apply: £3,000/year in small gifts (carry forward one year if unused), £250/person in small gifts, and unlimited gifts from normal income.
Common IHT Planning Strategies
- Use annual exemptions: £3,000/year plus £250 per recipient is straightforward and documented
- Gifts from surplus income: Regular gifts from income (not capital) that do not affect your standard of living are immediately exempt
- Pensions: Pension pots are generally outside your estate for IHT purposes. Maximising pension contributions can be an effective strategy (from April 2027, pensions will be brought into IHT for those dying after that date).
- Life insurance in trust: A life insurance policy written in trust pays out to beneficiaries without being part of the estate
- Charitable giving: Leaving 10%+ to charity reduces the IHT rate from 40% to 36%
- Business Relief: Qualifying business assets can receive 50-100% relief from IHT
For tracking your total estate value, the net worth calculator helps tally assets and liabilities. The retirement calculator can help with longer-term financial planning.
IHT rules are complex with many exemptions and reliefs. This calculator provides estimates only. Consult a qualified solicitor or financial advisor for estate planning advice. All calculations run in your browser. No data is sent to any server.
Frequently Asked Questions
What is the nil-rate band for Inheritance Tax?
The nil-rate band (NRB) for 2026/27 is £325,000. This is the amount of an estate that can be passed on tax-free. If the deceased was married or in a civil partnership and the first spouse did not use their full NRB, the unused portion transfers to the surviving spouse.
What is the Residence Nil-Rate Band?
The Residence Nil-Rate Band (RNRB) is an additional £175,000 allowance available when the family home is left to direct descendants such as children or grandchildren. It can be transferred between spouses, giving a combined RNRB of up to £350,000.
How does the RNRB taper work?
If the total estate value exceeds £2,000,000, the RNRB is reduced by £1 for every £2 above that threshold. For a single person, the RNRB is fully tapered away at an estate value of £2,350,000. For a married couple, it tapers to zero at £2,700,000.
Are transfers between spouses taxable?
No. Transfers between married couples and civil partners are completely exempt from IHT, regardless of amount. Any unused nil-rate band and RNRB from the first spouse to die can be claimed by the surviving spouse's estate.
What is the 7-year rule for gifts?
Gifts made more than 7 years before death are usually exempt from IHT. Gifts made between 3 and 7 years before death may benefit from taper relief, which reduces the tax rate. Gifts within 3 years of death are taxed at the full 40% rate if they exceed the nil-rate band.
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