Inheritance Tax on Property Calculator UK 2025/26

Reviewed by Mustafa Bilgic
UK Calculator Editor · Updated May 2026

How IHT applies to property in UK estates

When someone dies, their estate is valued at probate. Each individual has a £325,000 nil-rate band (NRB), and an additional £175,000 residence nil-rate band (RNRB) where a 'qualifying residential interest' passes to direct descendants (children, grandchildren, including step- and adopted).

Married couples and civil partners can transfer unused NRB/RNRB on first death to the surviving spouse — so a couple can leave up to £1m to children without IHT (£325k × 2 NRB + £175k × 2 RNRB) on the second death.

RNRB taper above £2m

If the estate is worth more than £2,000,000 at death, the RNRB tapers: £1 of RNRB is lost for every £2 of estate value above £2m. The RNRB is fully removed once the estate reaches £2,350,000 (£2m + £175k × 2).

Couples are doubly affected by the taper: it tests the surviving spouse's estate, which on second death includes whatever was inherited from the first spouse. Lifetime gifts, trusts, and downsizing relief help mitigate this for very large estates.

£550,000 estate, home £350,000, all to children

NRB £325,000 + RNRB £175,000 = £500,000 free. Taxable £50,000. IHT 40% × £50,000 = £20,000.

£900,000 second-death estate, couple's combined

£325k × 2 + £175k × 2 = £1m free. Estate £900k below threshold. IHT: £0.

£2.4m estate with home, RNRB tapered out

NRB £325,000. RNRB tapered: £175,000 − (£2.4m − £2m)/2 = £175,000 − £200,000 = £0 (capped at zero). Total bands £325k. Taxable £2.075m. IHT 40% = £830,000.

Common mistakes to avoid

• Forgetting RNRB requires direct descendants — leaving the home to a sibling loses RNRB.
• Not checking if the late first spouse used part of their NRB — transferable amount may be reduced.
• Missing the downsizing addition: if the home was sold before death and proceeds left to descendants, RNRB still applies up to the original home's value.
• Believing RNRB applies to a holiday cottage — only the family home (qualifying residential interest) qualifies.
• Forgetting the 7-year rule on lifetime gifts — gifts within 7 years still count toward the estate with taper relief from year 4.

When to use this calculator

Use during estate planning, when reviewing wills, and when valuing an estate at probate. Particularly useful for estates approaching the £2m taper threshold.

How this differs in Scotland, Wales and Northern Ireland

IHT is UK-wide. Scotland, Wales and NI use the same NRB/RNRB. Welsh and Scottish income tax differences don't affect IHT. The legal probate process differs slightly: Scotland uses 'confirmation' (similar to grant of probate).

When this calculator is and isn't the right tool

The Inheritance Tax on Property Calculator UK 2025/26 above is built for the most common UK 2025/26 scenarios in this tax area. It will be the right tool when your situation maps cleanly onto the inputs — single property or simple aggregation, standard HMRC rates and bands, and individual taxpayer (rather than complex trust or partnership structures). It is informational and does not replace tailored advice from a chartered tax adviser, especially for transactions above £500,000, cross-border situations, or where reliefs interact with each other. For year-end filings, always reconcile with HMRC's own free calculators on gov.uk before pressing submit on Self Assessment.

Closely related calculators

• Residence Nil-Rate Band — useful when you need a different angle on the same UK property tax topic, especially if your situation involves multiple types of property income or disposal.
• IHT Calculator (legacy) — useful when you need a different angle on the same UK property tax topic, especially if your situation involves multiple types of property income or disposal.
• CGT on Property — useful when you need a different angle on the same UK property tax topic, especially if your situation involves multiple types of property income or disposal.
• Landlord Tax — useful when you need a different angle on the same UK property tax topic, especially if your situation involves multiple types of property income or disposal.
• UK SDLT 2026 — useful when you need a different angle on the same UK property tax topic, especially if your situation involves multiple types of property income or disposal.

Glossary of UK property tax terms

NRB

Nil-Rate Band — £325,000 of estate value taxed at 0% before IHT applies.

RNRB

Residence Nil-Rate Band — additional £175,000 when home passes to direct descendants.

ATED

Annual Tax on Enveloped Dwellings — annual charge on company-owned UK residential property over £500,000.

Direct descendants

Children, grandchildren, including step-, adopted and foster children.

Gifts with reservation

Gifts where the donor continues to benefit from the asset, treated as still in the estate.

Tax planning checklist

1. Confirm the figures input above match your actual position — purchase contract, mortgage offer or completion statement.
2. Cross-check the year (2025/26) — figures change every April. The tax year 2026/27 starts 6 April 2026.
3. Use HMRC's official calculator at gov.uk for the final filing figure; this calculator is informational.
4. Keep records for at least 6 years — HMRC's normal enquiry window. 21 years for fraud investigations.
5. Discuss any unusual transaction (joint purchase, gift, divorce settlement, trust) with a qualified tax adviser.
6. Submit your return online via Government Gateway — paper deadlines are earlier and penalties harsher.