Free UK Inheritance Tax Calculator for 2025/26. Calculate IHT liability on estates, understand nil-rate band (£325,000), residence nil-rate band (£175,000).
Calculate potential inheritance tax (IHT) on an estate using current UK thresholds and rates. Input your estate details to see IHT liability and available reliefs.
Inheritance Tax (IHT) is a tax on the estate (property, money, and possessions) of someone who has died. The standard rate is 40% on estates valued above the nil-rate band threshold. It's one of the most significant wealth transfers taxes in the UK and careful planning can significantly reduce the burden on beneficiaries.
| Allowance | Amount | Notes |
|---|---|---|
| Nil-Rate Band (NRB) | £325,000 | Tax-free threshold for all estates |
| Residence Nil-Rate Band (RNRB) | £175,000 | Additional allowance for main residence to descendants |
| Single Person Maximum | £500,000 | NRB + RNRB combined |
| Married Couple Maximum | £1,000,000 | Both NRB + RNRB transferred from deceased spouse |
| RNRB Taper Threshold | £2,000,000 | RNRB reduced by £1 for every £2 above this |
Applied to estate value above the available nil-rate bands. This is the default rate for most estates.
If you leave at least 10% of your "baseline" net estate to charity, the entire taxable estate qualifies for the reduced 36% rate.
Certain transfers are completely exempt from IHT, which can significantly reduce the taxable estate:
| Exemption Type | Amount | Conditions |
|---|---|---|
| Annual Exemption | £3,000/year | Can carry forward 1 year if unused |
| Small Gifts Exemption | £250/person | To any number of people (not same as annual) |
| Wedding - Parent | £5,000 | Gift to child getting married |
| Wedding - Grandparent | £2,500 | Gift to grandchild getting married |
| Wedding - Anyone Else | £1,000 | Gift to anyone else getting married |
| Normal Expenditure | Unlimited | Regular gifts from income (not capital) |
Gifts made during your lifetime that don't qualify for an exemption may still be subject to IHT if you die within 7 years. These are called Potentially Exempt Transfers (PETs) and Chargeable Lifetime Transfers (CLTs).
| 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% |
| 7+ years | 100% | 0% |
Certain business and agricultural assets can qualify for significant IHT relief, potentially removing them entirely from the taxable estate.
Ownership Requirement: Assets must generally be owned and used in the business for at least 2 years before death to qualify for relief.
The RNRB provides an additional £175,000 allowance when passing your main residence to direct descendants (children, grandchildren, step-children, adopted children, foster children).
For estates worth more than £2 million, the RNRB is reduced by £1 for every £2 above this threshold. This means the RNRB is completely lost when the estate exceeds:
| Scenario | Taper Starts | RNRB Lost Entirely |
|---|---|---|
| Single person | £2,000,000 | £2,350,000 |
| Married couple (transferred RNRB) | £2,000,000 | £2,700,000 |
If you downsize or sell your home after 8 July 2015 and pass assets of equivalent value to direct descendants, you may still be able to claim RNRB on the value of the downsized/sold property.
The standard nil-rate band is £325,000 for 2025/26 (frozen until April 2028). If you leave your main residence to direct descendants (children, grandchildren), you can also claim the residence nil-rate band of £175,000, giving a maximum individual allowance of £500,000. Married couples and civil partners can transfer unused allowances, potentially giving a combined threshold of up to £1 million.
IHT is calculated at 40% on the value of an estate that exceeds the nil-rate band threshold. First, calculate the net estate value (assets minus debts and exempt transfers), then deduct the available nil-rate band (£325,000) and residence nil-rate band (£175,000 if applicable). The remaining amount is taxed at 40%, or 36% if at least 10% of the net estate goes to charity.
Yes, any unused nil-rate band and residence nil-rate band can be transferred to a surviving spouse or civil partner. This means a married couple can have a combined allowance of up to £1 million (£650,000 NRB + £350,000 RNRB). The transfer happens automatically when the second spouse dies - you claim the unused percentage from the first death.
Gifts made more than 7 years before death are usually exempt from IHT (Potentially Exempt Transfers). Gifts made within 7 years may still be taxable, but taper relief progressively reduces the tax rate. Gifts in the first 3 years are taxed at 40%, then the rate reduces every year until reaching 0% after 7 years.
Legal ways to reduce IHT include: making gifts within exemption limits (£3,000 annual, £250 small gifts), giving to charity (which also qualifies for 36% rate if 10%+ donated), setting up trusts for estate planning, using Business Property Relief or Agricultural Property Relief on qualifying assets, making gifts that survive 7 years, and lifetime giving from income.
Direct descendants for RNRB purposes include: children (including adopted and step-children), grandchildren and great-grandchildren, foster children who were fostered at any time before age 18, and the spouses/civil partners of any of these. It does not include nieces, nephews, siblings, or other relatives.
IHT is due 6 months after the end of the month in which the person died. The executor or personal representative is responsible for paying IHT from the estate before assets are distributed. For property, you can pay in instalments over 10 years. Interest is charged on late payments. HMRC form IHT400 must be submitted for taxable estates.
Life insurance payouts form part of your estate and are subject to IHT unless the policy is written in trust. By placing life insurance in trust, the payout goes directly to beneficiaries outside your estate, avoiding IHT entirely. This is a common and effective estate planning strategy. Speak to your life insurance provider about putting existing policies in trust.
Expert Reviewed — This calculator is reviewed by our team of financial experts and updated regularly with the latest UK tax rates and regulations. Last verified: January 2026.
Last updated: January 2026 | Verified with latest UK rates
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