Inheritance Tax Calculator 2026/27
IHT is charged at 40% on estate value above your nil-rate bands. For 2026/27: the Nil-Rate Band (NRB) is £325,000 — married couples can combine for £650,000. The Residence Nil-Rate Band (RNRB) adds up to £175,000 (£350,000 for couples) when passing a main home to direct descendants. Combined, a couple can have up to £1,000,000 of IHT-free allowances.
The RNRB is tapered for estates above £2 million. Gifts made more than 7 years before death fall outside the estate entirely.
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Inheritance Tax Calculator: Plan Your Estate
Inheritance Tax (IHT) affects more families every year as property prices rise and the tax-free thresholds remain frozen. This calculator estimates the IHT liability on an estate and shows how the nil-rate band, residence nil-rate band, and various exemptions can reduce or eliminate the tax bill entirely.
How Inheritance Tax works
IHT is charged at 40% on the value of an estate above the nil-rate band of £325,000. This threshold has been frozen since 2009 and is set to remain at this level for the foreseeable future. If you leave your home to direct descendants (children or grandchildren), an additional residence nil-rate band of £175,000 applies, effectively raising the threshold to £500,000 for individuals.
Married couples and civil partners can combine their allowances. A surviving spouse inherits the deceased's unused nil-rate band and residence nil-rate band, meaning a couple can pass up to £1,000,000 to their children completely IHT-free. This is one of the most generous IHT exemptions in the tax system.
Gifts and the 7-year rule
You can reduce your IHT liability by giving away assets during your lifetime. Gifts are generally exempt from IHT if you survive for 7 years after making them. Gifts made 3-7 years before death benefit from taper relief, which reduces the IHT rate on a sliding scale. There are also several annual exemptions: £3,000 per year, small gifts up to £250 per person, wedding gifts, and regular gifts from surplus income.
How Inheritance Tax Works in the UK
For a full breakdown of the nil-rate band, residence nil-rate band, gifting rules and taper relief, see our complete Inheritance Tax Thresholds guide.
Inheritance Tax (IHT) is a 40% tax on the value of your estate above your available allowances when you die. The good news: most estates pay no IHT because allowances cover a significant portion.
Standard Nil-Rate Band: £325,000
Everyone gets a £325,000 allowance. Anything below this passes tax-free.
Residence Nil-Rate Band: £175,000
An extra £175,000 if you leave your main home to direct descendants (children, grandchildren, step-children). Combined, a single person can pass on £500,000 tax-free.
Married Couples: Up to £1 Million
Any unused nil-rate band and residence band transfers to your surviving spouse. If spouse A dies and leaves everything to spouse B (which is IHT-exempt), spouse B can use both allowances when they die — potentially £1 million tax-free.
Lifetime Gifts and Taper Relief
Gifts made within 7 years of death may still be taxed, but taper relief reduces the rate:
| Years Before Death | Taper Relief | Effective IHT Rate |
|---|---|---|
| 0–3 years | 0% | 40% |
| 3–4 years | 20% | 32% |
| 4–5 years | 40% | 24% |
| 5–6 years | 60% | 16% |
| 6–7 years | 80% | 8% |
| Over 7 years | 100% | 0% |
Exemptions That Reduce IHT
- Spouse exemption: Gifts to UK-domiciled spouses are IHT-free
- Annual exemption: £3,000 per year (£6,000 if unused from previous year)
- Small gifts: Up to £250 per person, unlimited recipients
- Wedding gifts: £1,000-£5,000 depending on relationship
- Normal expenditure: Regular gifts from surplus income
- Charity: Gifts to registered charities are IHT-free
If you leave 10% or more of your net estate to charity, the IHT rate on the remaining taxable estate drops from 40% to 36%. This can mean more money for both your beneficiaries and your chosen charities.
Frequently Asked Questions
How can I reduce inheritance tax?
Do I pay IHT if I leave everything to my spouse?
Are pensions included in my estate for IHT?
What is a Potentially Exempt Transfer (PET)?
Sources & Methodology
This calculator uses the following official sources for the 2026/27 tax year:
- Gov.uk Inheritance Tax overview
- HMRC Residence Nil-Rate Band guidance
- HMRC Inheritance Tax gifts and exemptions
All calculations are verified against official HMRC thresholds where available. Figures are estimates for guidance only — for complex situations involving multiple income sources, non-standard tax codes, or international tax obligations, consult a regulated accountant or tax adviser.