Inheritance tax calculator 2026/27
- Calculate IHT on your estate
- Nil-rate band and residence nil-rate band
- Spouse exemption and transferable allowances
- 7-year gift taper modelling
- No sign-up required
Inheritance tax calculator
Enter your estate details for a 2026/27 IHT estimate. Nothing is stored or sent anywhere.
Estimate only, based on 2026/27 HMRC rates (nil-rate band £325,000, residence nil-rate band £175,000, 40% standard rate). It doesn't cover trusts, business or agricultural relief, or the detail of gift taper. Not financial or legal advice. Source: HMRC.
How inheritance tax works in the UK
Inheritance Tax (IHT) is charged at 40% on the value of your estate above the nil-rate band when you die. The nil-rate band (NRB) is £325,000 for 2026/27. It's been frozen at £325,000 since 2009 and is set to remain there until at least 2028.
But most people don't pay IHT. Only around 4% of estates are liable each year (roughly 27,000 out of 600,000 deaths). That's because of the spouse exemption, the residence nil-rate band, and the £325,000 threshold itself. Most estates below £500,000 for singles or £1,000,000 for married couples pay nothing.
The two nil-rate bands
You get two potential allowances:
| Allowance | Amount | Condition |
|---|---|---|
| Nil-rate band (NRB) | £325,000 | Everyone gets this |
| Residence nil-rate band (RNRB) | £175,000 | Must leave a home to direct descendants |
| Combined (single person) | £500,000 | If RNRB conditions met |
| Combined (married couple) | £1,000,000 | Transferable allowances on second death |
The residence nil-rate band only applies if you leave a property (or the proceeds from selling one) to your children, grandchildren, or other direct descendants. It doesn't apply if you leave your home to siblings, nieces/nephews, friends, or a trust (unless it's a bare trust for a direct descendant). To work out exactly how much you can claim, including the value-of-home cap and the £2 million taper, use the residence nil-rate band calculator.
Spouse exemption: unlimited
Everything you leave to a spouse or civil partner is completely exempt from IHT. No limit. You could leave a £10 million estate to your spouse and zero IHT would be due. The tax only becomes relevant on the second death, when the estate passes to the next generation.
And here's the important part: any unused nil-rate band from the first death can be transferred to the surviving spouse. If the first spouse used none of their NRB (because everything went to the survivor), the second spouse gets a double NRB of £650,000, plus a double RNRB of £350,000 if the property conditions are met. Combined threshold: £1,000,000. If you're working out the tax on a second death or a widow or widower's estate, the second death calculator handles the doubled allowances.
Worked example: single person, £600,000 estate
You're single, your estate is worth £600,000 (including a house worth £400,000), and you leave everything to your two children.
| Step | Calculation |
|---|---|
| Estate value | £600,000 |
| Nil-rate band | -£325,000 |
| Residence nil-rate band | -£175,000 (home left to children) |
| Taxable estate | £100,000 |
| IHT at 40% | £40,000 |
| Net to beneficiaries | £560,000 |
Without the residence nil-rate band, the tax would be £110,000 (40% of £275,000). The RNRB saves £70,000 in this example.
The RNRB taper for estates over £2 million
If your estate exceeds £2 million, the residence nil-rate band is reduced by £1 for every £2 over £2 million. At an estate value of £2,350,000, the RNRB is completely eliminated. This taper doesn't affect the standard nil-rate band, only the RNRB.
For a couple with a combined estate of £2.5 million, the RNRB reduction on the second death would be (£2,500,000 - £2,000,000) ÷ 2 = £250,000. Since the RNRB is only £350,000 (double for a couple), it would be reduced to £100,000. Their combined threshold drops from £1,000,000 to £750,000.
The 36% rate: charity reduction
If you leave at least 10% of your "baseline amount" (broadly, the taxable estate after deducting allowances and exemptions) to qualifying charities, the IHT rate drops from 40% to 36%. On a £1 million estate with £500,000 taxable, leaving 10% (£50,000) to charity would cost you £50,000 in charitable gifts but save £20,000 in tax (4% × £500,000). Net cost of giving £50,000 to charity: £30,000.
Gifts and the 7-year rule
Gifts you make during your lifetime are called "potentially exempt transfers" (PETs). If you survive 7 years after making the gift, it's completely outside your estate and no IHT is due. Die within 7 years and the gift is added back to your estate for IHT purposes.
There's a taper relief for gifts made between 3 and 7 years before death:
| Years before death | Tax rate on gift |
|---|---|
| 0 to 3 | 40% |
| 3 to 4 | 32% |
| 4 to 5 | 24% |
| 5 to 6 | 16% |
| 6 to 7 | 8% |
| 7+ | 0% |
Taper relief only matters if the total gifts exceed the nil-rate band. If someone gives away £400,000 and dies 4 years and 6 months later, the first £325,000 is covered by the NRB (no tax regardless). Only the remaining £75,000 attracts taper relief, and at that point it sits in the 4 to 5 year band at 24%, so the tax is £18,000. Had they died a year later, in the 5 to 6 year band, the rate would drop to 16% (£12,000). You can model this on the taper relief calculator.
Annual exemptions you can use now
Some gifts are immediately exempt, regardless of the 7-year rule:
- Annual exemption: £3,000 per year (unused portion carries forward 1 year only)
- Small gifts: £250 per recipient per year (unlimited recipients, but can't combine with the annual exemption for the same person)
- Wedding gifts: £5,000 from a parent, £2,500 from a grandparent, £1,000 from anyone else
- Gifts from surplus income: unlimited, if made from income (not capital), regular, and you maintain your usual standard of living after making them
The "gifts from surplus income" exemption is the most powerful for wealthy individuals. If you earn £100,000 after tax and spend £60,000 on living costs, you can gift £40,000 per year (£3,333/month) from income with no IHT consequences, provided you do it regularly. Over 10 years, that's £400,000 removed from your estate entirely.
Who pays the IHT bill?
The executors of your estate pay IHT before distributing assets. The tax is due 6 months after the end of the month of death. If the estate is mainly property (and cash isn't available), HMRC allows IHT on property to be paid in 10 annual instalments, with interest charged on the outstanding amount.
Common inheritance tax questions
How much inheritance tax will I pay? You pay 40% only on the part of your estate above your allowances. Everyone has the £325,000 nil-rate band, and up to £175,000 more if you leave your home to children or grandchildren. So a single person can pass on £500,000 tax-free, and a married couple £1,000,000. Below those figures, nothing is due.
How is inheritance tax calculated? Total the estate, take off the £325,000 nil-rate band and any £175,000 residence nil-rate band, then apply 40% to the rest. A £600,000 estate that includes a home left to children uses both allowances (£500,000), so £100,000 is taxable and the bill is £40,000.
How much inheritance tax is due on a £400,000 estate? For most people, none. £400,000 is below the £500,000 threshold a single person gets when a home passes to direct descendants. Even without the residence nil-rate band, only the £75,000 above the £325,000 nil-rate band would be taxed, giving £30,000, and the residence allowance usually removes that where the estate includes a home.
What is the residence nil-rate band? An extra £175,000 allowance on top of the £325,000 nil-rate band, but only when you leave a home (or the money from selling one) to direct descendants like children or grandchildren. It doesn't apply to homes left to siblings, friends, or most trusts. And for estates above £2 million it tapers away by £1 for every £2 over that line.
For a full breakdown of thresholds, transferable allowances, and planning strategies, read our complete guide: Inheritance tax thresholds 2026/27.