Inheritance Tax Calculator UK 2026/27: Estimate IHT on Your Estate

You pay 0% on everything within your tax-free allowances. For a single person in 2026/27, that is up to £500,000 (£325,000 basic allowance plus £175,000 if your home passes to children or grandchildren). Married couples can pass on up to £1,000,000 tax-free. Any taxable estate above these allowances is charged at 40%, or 36% if you leave at least 10% to charity.

The standard nil-rate band is £325,000 per person and remains frozen until 5 April 2030 under HMRC statute. Every pound of your net estate up to £325,000 is taxed at 0%. Married couples and civil partners can transfer any unused allowance on second death, giving a combined basic allowance of £650,000 before property reliefs.

The residence nil-rate band adds up to £175,000 of tax-free allowance when you leave your home to direct descendants—children, grandchildren, or stepchildren. Combined with the £325,000 basic allowance, a single person can pass on £500,000 tax-free, and a surviving spouse up to £1,000,000. It tapers away on estates worth over £2,000,000.

The 40% rate applies only to the net portion of your estate above your available allowances. For example, on a £1,000,000 estate with £500,000 of combined allowances (£325,000 basic plus £175,000 residence), tax applies to the remaining £500,000. Tax owed is £200,000, giving an effective tax rate of 20% across the full estate.

Yes. Married couples and civil partners can combine both £325,000 basic allowances (£650,000 total) and both £175,000 residence allowances (£350,000 total) when leaving a qualifying family home to children or grandchildren. This creates a £1,000,000 aggregate tax-free threshold on second death, provided the estate does not exceed the £2,000,000 taper threshold.

Assets passed to a surviving husband, wife, or civil partner who lives in the UK are 100% exempt from inheritance tax, with no financial limit. No tax is due on first death, and any unused portion of their £325,000 nil-rate band and £175,000 residence allowance automatically transfers to the survivor.

Outright gifts to individuals are treated as potentially exempt transfers. If you live for seven full years after making the gift, it drops out of your estate completely tax-free. If you die within seven years, the gift is added back into your estate, using up your £325,000 tax-free allowance first.

Taper relief reduces tax on lifetime gifts over £325,000 if you die between three and seven years after giving them. Gifts made within 3 years are taxed at the full 40%. Tax reduces to 32% in years 3 to 4, 24% in years 4 to 5, 16% in years 5 to 6, and 8% in years 6 to 7. After seven years, it is 0%.

You can give away £3,000 each tax year completely free of inheritance tax under your annual exemption. If you did not use it last year, you can carry it forward one year for a £6,000 limit. You can also give small gifts of up to £250 per person, wedding gifts up to £5,000 to children, and regular gifts out of surplus income.

You only pay tax if the total net value of their estate—including the house, savings, and investments—exceeds their available tax-free allowances. If your parents were married and left their home to you, up to £1,000,000 can pass entirely tax-free using their combined nil-rate bands. Any inheritance tax due is settled by the estate executor before assets are distributed.

It tapers down. For every £2 your net estate exceeds £2,000,000, the residence allowance drops by £1. For a single person with a £175,000 residence allowance, it disappears completely at £2,350,000. For a surviving spouse with a transferred £350,000 allowance, the allowance tapers to zero at £2,700,000.

From 6 April 2027, the UK government is bringing most unused defined contribution pension pots and death benefits into the scope of inheritance tax. Previously, pensions held in discretionary trusts sat outside the taxable estate. Pension scheme administrators will report and settle tax on remaining pots alongside the estate executors under updated statutory rules.

Yes. Whatever percentage of the nil-rate band your late spouse or civil partner did not use can be claimed on second death, even if they died decades ago. If they left everything to you (using 0% of their allowance), your estate gets a 100% boost, giving £650,000 basic allowance plus up to £350,000 residence allowance.

Gifts to registered UK charities in your will are 100% tax-free and deducted from your estate. Additionally, if you leave at least 10% of your net estate (after allowances and spouse gifts) to qualifying charities, the inheritance tax rate on the remainder of your taxable estate drops from 40% to 36%.

Inheritance tax must be paid by the end of the sixth month following the date of death. It is paid by the executor or personal representative directly from the deceased person’s estate funds before beneficiaries receive their inheritances. If tax is due on property, executors can elect to pay in 10 equal annual instalments, subject to HMRC interest.

Calculate open-market value for all assets at the date of death: property, bank accounts, investments, personal goods, and gifts made in the previous 7 years. Then subtract qualifying debts such as mortgages, loans, credit cards, and reasonable funeral costs. The resulting net estate is compared against your available tax-free allowances.