Inheritance Tax Calculator
Results
Calculation based on HMRC IHT rates for 2026/27. For guidance only -- seek professional advice for estate planning.
How Inheritance Tax Works
Inheritance Tax (IHT) is charged on the value of a person's estate when they die. The estate includes property, savings, investments, and possessions, minus any debts, funeral expenses and liabilities. If the net estate exceeds the nil-rate band (currently £325,000), IHT is charged at 40% on the excess.
The personal representatives of the deceased (executors or administrators) are responsible for calculating and paying IHT, usually before probate is granted. IHT must typically be paid within 6 months of the end of the month of death, though property-related IHT can be paid in instalments over 10 years.
What is the UK Inheritance Tax Threshold and Rates for 2026/27?
Inheritance Tax (IHT) is charged at 40% on the net value of an estate exceeding statutory tax-free allowances. Every individual has a basic Nil-Rate Band (NRB) of £325,000 and a potential Residence Nil-Rate Band (RNRB) of £175,000.
| Statutory Allowance | Allowance Amount (2026/27) | Statutory Rules & Conditions |
|---|---|---|
| Nil-Rate Band (NRB) | £325,000 | Standard 0% tax-free threshold per individual (frozen until 2028) |
| Residence Nil-Rate Band (RNRB) | £175,000 | Main home left to direct descendants (children/grandchildren) |
| Transferable NRB (Spousal) | Up to £650,000 | 100% of unused NRB transferred from deceased spouse |
| Transferable RNRB (Spousal) | Up to £350,000 | 100% of unused RNRB transferred from deceased spouse |
| Maximum Combined Threshold | £1,000,000 | Combined NRB + RNRB for a married couple / civil partners |
How Does the £2 Million Residence Nil-Rate Band (RNRB) Taper Work?
For estates valued over £2,000,000, the £175,000 Residence Nil-Rate Band is reduced by £1 for every £2 of net estate value above £2 million. The RNRB is completely lost once an estate reaches £2,350,000 (or £2,700,000 for a surviving spouse with a transferred RNRB).
How Does the 7-Year Gift Taper Rule Work in the UK?
Gifts made during your lifetime become Potentially Exempt Transfers (PETs). If you survive 7 years after gifting, the gift is 100% tax-free. If you die within 7 years, taper relief reduces the tax rate on gifts exceeding the £325,000 Nil-Rate Band.
| Years Between Gift and Death | Taper Tax Reduction | Effective IHT Rate Charged |
|---|---|---|
| 0 – 3 years | 0% (no relief) | 40% |
| 3 – 4 years | 20% reduction | 32% |
| 4 – 5 years | 40% reduction | 24% |
| 5 – 6 years | 60% reduction | 16% |
| 6 – 7 years | 80% reduction | 8% |
| Over 7 years | 100% (fully exempt) | 0% |
What Lifetime Gifts are 100% Exempt from UK Inheritance Tax?
HMRC permits specific statutory exemptions that are immediately free from Inheritance Tax without triggering the 7-year rule:
- Annual Exemption: Up to £3,000 per tax year (unused amount carries forward 1 year up to £6,000).
- Small Gifts: Up to £250 per person per tax year to unlimited individual recipients.
- Wedding Gifts: Up to £5,000 from a parent, £2,500 from a grandparent, and £1,000 from others.
- Regular Gifts from Surplus Income: Regular payments from disposable income that do not reduce your standard of living.
- Spousal Transfers: 100% exempt with no upper cap between UK-domiciled spouses.
Step-by-Step Inheritance Tax Calculations (Worked Examples)
The mathematical breakdowns below show exact calculations for the 7-year gift taper, the £2m estate clawback, and spousal thresholds.
£400k Gift Made 5.5 Years Before Death
Demonstrates the 7-Year NRB Taper Trap mechanism.
£2.2m Estate (£100k RNRB Clawback)
Demonstrates the £1 for £2 taper over £2 million.
Married Couple Passing £900k Home
Demonstrates 100% spousal allowance transfer.
Frequently Asked Questions
The standard UK Inheritance Tax nil-rate band is £325,000, plus an additional £175,000 Residence Nil-Rate Band (RNRB) when passing a family home to direct descendants, totaling £500,000 for an individual or £1,000,000 for a married couple.
Gifts made over 7 years before death are 100% tax-free. Gifts made within 7 years exceeding the £325,000 nil-rate band incur tax on a sliding taper: 40% (0–3 yrs), 32% (3–4 yrs), 24% (4–5 yrs), 16% (5–6 yrs), and 8% (6–7 yrs).
The £175,000 Residence Nil-Rate Band tapers down by £1 for every £2 an estate's net value exceeds £2,000,000. The relief is completely lost once an estate reaches £2,350,000.
Yes. Transfers between UK-domiciled spouses or civil partners are 100% exempt from Inheritance Tax, and 100% of any unused nil-rate bands transfer to the surviving spouse.
Leaving 10% or more of your net estate to registered charities reduces the statutory Inheritance Tax rate on the remaining taxable estate from 40% down to 36%.