Inheritance Tax Calculator UK 2026/27

Inheritance Tax Calculator UK

Complete Guide to Calculating Inheritance Tax in 2026/27

A UK inheritance tax calculator estimates how much IHT may be due on an estate. It asks for information about the value of assets, outstanding debts, gifts made in the previous seven years, the relationship between the deceased and their beneficiaries, and whether a qualifying home is being left to direct descendants. From that information, the calculator applies the relevant nil-rate band, residence nil-rate band, and other allowances to produce an estimated IHT figure.

The result is an estimate, not a tax assessment. The actual amount payable depends on how HMRC values the estate, which reliefs are claimed, and a range of individual circumstances. For complex estates, professional advice from a solicitor or tax adviser is recommended.

This guide explains how inheritance tax is calculated, what information you need, and how the key allowances and exemptions work for 2026/27.

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What This Guide Covers

✓ What information you need to calculate IHT
✓ How inheritance tax is calculated step by step for 2026/27
✓ Nil-rate band and residence nil-rate band explained
✓ Transferable allowances for married couples and civil partners
✓ Gifts and the seven-year rule
✓ Common exemptions and reliefs
✓ Frequently asked questions on IHT thresholds and rates

What You Need to Calculate Inheritance Tax

Before using an IHT calculator or working through the calculation manually, it helps to gather the following information:

Assets

✓ Property value (after mortgage)
✓ Savings and bank accounts
✓ Investments and shares
✓ Pension arrangements (changes to the IHT treatment of unused pension funds are scheduled from 6 April 2027; treatment depends on the arrangement and circumstances)
✓ Business assets
✓ Personal possessions of significant value

Deductions and allowances

✓ Outstanding debts and liabilities
✓ Gifts made in the previous seven years
✓ Whether the deceased had a spouse or civil partner
✓ Whether a qualifying home is left to direct descendants
✓ Charitable gifts in the will
✓ Whether a transferable nil-rate band is available

What is Inheritance Tax?

Inheritance tax is a tax on the estate (the money, property, and possessions) of someone who has died. It is charged at 40% on the portion of the estate that exceeds the available tax-free allowances.

The standard tax-free allowance is £325,000 (the nil-rate band)
IHT is charged at 40% on the taxable amount above the allowances
It is generally due within 6 months of the end of the month of death
Whether IHT is due depends on the estate’s value, debts, exemptions, reliefs and available allowances

Simple example (single person, no RNRB):

• Estate value: £525,000

• Nil-rate band: £325,000 tax-free

• Taxable amount: £200,000

• Estimated IHT: £200,000 × 40% = £80,000

This is a simplified illustration. Actual liability depends on all applicable allowances, reliefs and individual circumstances.

Current Inheritance Tax Rates and Thresholds 2026/27

UK Inheritance Tax Nil-Rate Bands 2026/27

Visual breakdown of allowances and thresholds

£325,000

Nil-Rate Band

Basic allowance for everyone

£175,000

Residence NRB

When leaving home to children

£1,000,000

Married Couple Max

Combined transferable allowances

Nil-Rate Band (NRB)

£325,000 - This is the basic tax-free allowance
Fixed at this level through the 2030/31 tax year under current policy
Applies to everyone, regardless of circumstances
Can be transferred to spouse/civil partner if unused

Residence Nil-Rate Band (RNRB)

£175,000 - Additional allowance when passing your home to direct descendants
Only applies if you own property
Must be left to children, grandchildren, step-children, or adopted children
Cannot be left to siblings, nieces, nephews, or friends
Starts to taper when the net value of the estate exceeds £2 million, reducing by £1 for every £2 above that threshold

IHT Rates 2026/27

40%

Standard Rate

On everything above your allowances

36%

Charity Rate

If you leave 10%+ of estate to charity

0% on anything left to spouse/civil partner

(Unlimited spousal exemption)

How Inheritance Tax is Calculated: Eight Steps

The IHT calculation follows a consistent process. Each step is applied in sequence and the result depends on the individual circumstances of the estate.

Calculate the gross estate

Add up everything the deceased owned: property, savings, investments, personal possessions, business assets, and any other assets.

Deduct allowable liabilities

Deduct liabilities that HMRC allows, such as mortgages, loans, credit cards and unpaid bills, and account separately for reasonable funeral expenses where permitted. Not every expense or family arrangement is deductible.

Account for exempt transfers and reliefs

Consider assets passing to a spouse or civil partner, qualifying charitable gifts and any assets that meet the detailed conditions for Business Relief or Agricultural Relief. These rules are not automatic.

Apply the available nil-rate band

The standard nil-rate band is £325,000 for 2026/27. The first £325,000 of the chargeable estate is taxed at 0%.

Check residence nil-rate band eligibility

Up to £175,000 may be available where a qualifying home is left to direct descendants. The allowance starts to taper when the net value of the estate exceeds £2 million, reducing by £1 for every £2 above the threshold.

Account for transferable allowances

Where the deceased's spouse or civil partner died previously without using some or all of their NRB or RNRB, the unused proportion can generally be transferred and added to the current estate's allowances.

Consider gifts made within seven years

Gifts made during the seven years before death can affect the nil-rate band. Taper relief may reduce the IHT payable on certain chargeable transfers made between three and seven years before death; it does not apply automatically to every gift.

Apply the IHT rate to the taxable amount

The standard rate is generally 40%. A reduced 36% rate can apply where a qualifying charitable legacy meets HMRC’s test.

Worked example — couple, home to children (deaths after 6 April 2026)

Gross estate	£950,000
Less: mortgage and debts	−£50,000
Net estate	£900,000
Nil-rate band (own)	−£325,000
Transferable NRB (unused spouse allowance)	−£325,000
Residence nil-rate band (own)	−£175,000
Transferable RNRB (unused spouse allowance)	−£175,000
Taxable amount	£0
Estimated IHT due	£0

In this example, the full £1,000,000 of combined allowances covers the estate. The actual result depends on whether transferable allowances are genuinely available and qualifying conditions are met.

Calculate Your Estimated IHT

Use our free calculator to estimate potential IHT from your estate value, allowances, gifts and other relevant information.

Use the Free IHT Calculator →

How much inheritance tax will I pay?

The amount of IHT payable depends on the taxable estate — the net value of assets after deducting liabilities, exemptions, and all available allowances. There is no single answer that applies to all estates.

Key factors include:

Whether the estate exceeds the nil-rate band (£325,000)
Whether the residence nil-rate band applies (up to a further £175,000)
Whether any transferable allowances are available from a deceased spouse or civil partner
Whether any assets qualify for Business Relief, Agricultural Relief or other exemptions
Whether gifts made in the last seven years use up part of the nil-rate band
Whether a charitable legacy reduces the rate to 36%

Use the free IHT calculator to apply all of these factors to a specific estate.

What is the inheritance tax threshold in 2026/27?

There are two main thresholds:

Allowance	Amount	Conditions
Nil-rate band (NRB)	£325,000	Applies to everyone
Residence nil-rate band (RNRB)	Up to £175,000	Qualifying home left to direct descendants; starts to taper above a net estate value of £2m
Transferable NRB	Up to £325,000	Unused NRB from deceased spouse or civil partner
Transferable RNRB	Up to £175,000	Unused RNRB from deceased spouse or civil partner

How much can a married couple leave tax-free?

A married couple or civil partners can potentially pass up to £1,000,000 free of IHT to their children by combining NRB, RNRB, transferable NRB and transferable RNRB. However, this is not automatic in every case.

Conditions required for the full £1,000,000

The first spouse must have died with some or all of their NRB and/or RNRB unused
A qualifying home (or equivalent value under downsizing rules) must be left to direct descendants
The RNRB starts to taper when the surviving spouse’s net estate exceeds £2,000,000, reducing by £1 for every £2 above that threshold
The transferable allowance must be claimed on the second death using form IHT402

A qualifying individual may have up to £500,000 of combined NRB and RNRB available. A qualifying surviving spouse or civil partner may potentially have up to £1,000,000 where unused allowances can be transferred and the residence conditions are met. Above £2 million, the RNRB tapers and can eventually be lost. Each estate is different. Read our nil-rate band guide and residence nil-rate band guide for more detail.

Allowances and exemptions explained

Nil-rate band (NRB) — £325,000

The standard IHT-free allowance for every estate. Fixed at £325,000 through the 2030/31 tax year under current policy. Full guide →

Residence nil-rate band (RNRB) — up to £175,000

Additional allowance when a qualifying home is left to direct descendants (children, grandchildren, step-children, adopted children). It starts to taper when the net estate exceeds £2 million, reducing by £1 for every £2 above the threshold. Full guide →

Transferable nil-rate band

Any unused NRB from the estate of a deceased spouse or civil partner can be transferred and added to the surviving spouse’s allowance at the second death. Claimed on form IHT402.

Transferable residence nil-rate band

Any unused RNRB from the estate of a deceased spouse or civil partner can also be transferred, subject to the conditions being met on the second death.

Spouse and civil partner exemption

Transfers to a spouse or civil partner are generally exempt from IHT, although special rules can restrict the spouse or civil-partner exemption where the recipient is not a long-term UK resident. This can defer IHT to the second death.

Charity exemption

Gifts to UK-registered charities are fully exempt from IHT. If at least 10% of the net estate is left to charity, the IHT rate on the remainder reduces from 40% to 36%.

Business Relief and Agricultural Relief

From 6 April 2026, 100% relief on the combined value of qualifying agricultural and business property is limited to £2.5 million for an individual, subject to detailed rules. Qualifying value above the available allowance generally receives 50% relief. See HMRC’s current 2026 relief guidance for the conditions and how gifts or transferable allowance can affect the result.

Gifts and the seven-year rule

Gifts made during a person’s lifetime can affect the IHT calculation. Certain gifts — called potentially exempt transfers (PETs) — become fully IHT-free if the person survives seven years after making them. If they die within seven years, the gift may use up some or all of the nil-rate band.

Not every gift is potentially taxable. The following are exempt regardless of the seven-year rule:

Annual exemption: £3,000 per tax year (plus any unused allowance from the previous year)
Small gifts: up to £250 per person per year
Wedding and civil partnership gifts: up to £5,000 from a parent, £2,500 from a grandparent, £1,000 from anyone else
Normal expenditure out of income: regular gifts from surplus income can be IHT-free if they do not affect the donor’s standard of living
Gifts to spouses and civil partners: exempt during lifetime and on death
Gifts to charities: fully exempt

Read our full guide to the seven-year rule and lifetime gifts for detail on taper relief and how gifts interact with the nil-rate band.

Key IHT Deadlines

6 months

Pay inheritance tax

HMRC charges interest on unpaid IHT after six months from the end of the month of death. Property and certain other assets may qualify for instalment payments over ten years.

12 months

Submit IHT return (IHT400)

Where an IHT400 is required, it should be submitted within 12 months of the end of the month of death. Penalties may apply for late submission.

2 years

Deed of variation deadline

Beneficiaries can redirect their inheritance using a deed of variation within two years of death. This can sometimes reduce IHT.

When to seek professional advice

A calculator is a good starting point when:

The estate is relatively straightforward
Assets are mainly property and savings
You want to understand the broad position
You are planning ahead and want to estimate future IHT

Consider professional advice for:

High-value estates or material potential tax consequences
Multiple or overseas properties
Business or farm assets
Significant gifts in the last seven years
Trusts or complex ownership structures
Disputes between beneficiaries

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How to reduce an IHT bill

Annual gifting

£3,000 annual exemption per year, plus £250 small gifts per recipient and other exempt gifts

Charitable legacies

Leaving 10%+ of the net estate to charity reduces the IHT rate to 36%

Life insurance in trust

A policy written in trust can pay out outside the estate, covering an IHT bill without adding to it

Pension planning

Changes to the IHT treatment of unused pension funds are scheduled from 6 April 2027. The result can depend on the pension arrangement and circumstances — read the pension guide.

Business and Agricultural Relief

From 6 April 2026, qualifying property can receive 100% relief up to the available £2.5m combined allowance, then generally 50% relief, subject to conditions — see HMRC guidance

Potentially exempt transfers

Gifts to individuals become fully IHT-free after seven years — seven-year rule guide

Frequently Asked Questions

How much inheritance tax will I pay on a £500,000 estate?

It depends on the available allowances. A single person with no RNRB would have a £175,000 taxable amount (£500,000 minus the £325,000 NRB), giving an estimated IHT bill of £70,000. If the RNRB applies (home left to children), the tax-free threshold rises to £500,000 and the estimated bill would be £0. Use the calculator to apply your specific circumstances.

How much inheritance tax will I pay on a £1 million estate?

A single person with NRB and full RNRB (total £500,000) would have a taxable amount of £500,000 and an estimated bill of £200,000 at 40%. A surviving spouse benefiting from full transferable NRB and RNRB (total £1,000,000) could potentially pay no IHT, if all conditions are met. The actual position depends on the full circumstances.

Is inheritance tax 40% of the whole estate?

No. The 40% rate applies only to the portion of the estate above the available allowances. The nil-rate band, residence nil-rate band and any transferable allowances are all subtracted first. Some estates pay no IHT because the available allowances, exemptions and reliefs cover the taxable estate.

What is the inheritance tax threshold in 2026/27?

The standard nil-rate band is £325,000. A qualifying individual may also have up to £175,000 of residence nil-rate band where a qualifying home is left to direct descendants. The RNRB starts to taper when the net value of the estate exceeds £2 million, reducing by £1 for every £2 above that threshold.

Can married couples combine their inheritance tax allowances?

Yes, in many cases. Where the first spouse to die does not use all of their NRB or RNRB, the unused proportion can generally be transferred to the surviving spouse’s estate. This can allow a combined allowance of up to £1,000,000 where the qualifying residence conditions are met. The RNRB starts to taper when the net value of the estate exceeds £2 million.

Does the family home qualify for the residence nil-rate band?

It can, where the deceased owned a qualifying residence and left it to direct descendants (children, grandchildren, step-children or adopted children). The RNRB starts to taper when the net estate value exceeds £2 million; downsizing rules may also apply if the home was sold before death. Read our RNRB guide for full details.

Do gifts count towards inheritance tax?

Gifts made within seven years of death can use up part of the nil-rate band and, in some cases, attract IHT directly. However, many gifts are exempt — including the £3,000 annual exemption, small gifts, wedding gifts and normal expenditure out of income. Gifts that survive seven years from the date they were made are generally outside the estate. See our seven-year rule guide.

Who actually pays inheritance tax?

IHT is generally paid by the personal representatives (executors) of the estate before it is distributed to beneficiaries. The tax is paid from estate assets. Beneficiaries do not normally pay IHT on what they receive — though they may have Income Tax on income arising from inherited assets.

When does inheritance tax have to be paid?

IHT is generally due within six months of the end of the month in which the person died. Interest is charged on unpaid IHT after this point. For property and some other assets, HMRC allows payment by instalments over ten years. The IHT400 form is typically required within 12 months.

Do I pay inheritance tax on my parents' house?

IHT is paid by the estate, not by you as the beneficiary. Whether any IHT arises depends on the total value of the estate after all allowances, exemptions and reliefs have been applied. If the estate is below the available thresholds, no IHT will be due regardless of the property value.

Estimate Your Inheritance Tax

Use our free calculator to estimate potential IHT from your estate, allowances, gifts and other relevant information.

Free IHT Calculator → Speak to a Specialist

Sources and further reading

Last reviewed: August 2026 • Tax year: 2026/27 • This guide is for general information only and does not constitute legal, tax or financial advice. Rules are subject to change. Seek professional advice for complex estates.