UK Inheritance Tax Calculator 2026
Estimate inheritance tax on an estate using the £325,000 nil-rate band, the £175,000 residence band for a home left to children, a transferred spouse allowance and the 36% charity rate.
| Net estate | — |
|---|---|
| Less exempt gifts to spouse and charity | — |
| Plus chargeable lifetime gifts (7 years) | — |
| Nil-rate band | — |
| Residence nil-rate band | — |
| Taxable estate | — |
| Rate | — |
| Effective rate on the whole estate | — |
| Left for beneficiaries | — |
In short
UK inheritance tax is 40% on the part of an estate above the £325,000 nil-rate band (36% if 10%+ goes to charity), plus a £175,000 residence nil-rate band when a home passes to children or grandchildren, tapered away above £2 million; unused bands transfer to a surviving spouse, giving couples up to £1 million tax-free. Thresholds are frozen until April 2030.
Who this is for: Executors, families and people planning their estate who want a quick estimate of UK inheritance tax exposure.
How inheritance tax is worked out
- Nil-rate band £325,000 — no tax on the first £325,000 of the estate plus chargeable gifts made in the 7 years before death. Frozen until April 2030.
- Residence nil-rate band £175,000 — an extra allowance when the home (or the proceeds of a home sold after 2015) passes to children, stepchildren, grandchildren or their spouses. Capped at the home's value; tapered by £1 for every £2 the net estate exceeds £2 million, so it is gone at £2.35 million.
- Transferable allowances — anything a first-to-die spouse or civil partner did not use passes to the survivor, giving a widow or widower up to £650,000 + £350,000 = £1 million tax-free.
- Exempt: everything left to a spouse/civil partner or to charity; the £3,000 annual gift exemption; small gifts and wedding gifts; gifts out of surplus income.
- Rate: 40% on the taxable part, or 36% if at least 10% of the net estate goes to charity.
- Gifts made 3–7 years before death are taxed on a sliding "taper relief" scale (not modelled here — the calculator counts them in full).
From April 2027, unused pension funds are expected to be brought into the estate for IHT; from April 2026 agricultural and business property relief is limited to 100% on the first £1 million and 50% above.
See also: UK Capital Gains Tax Calculator 2026/27, UK Mortgage Repayment Calculator.
Assumptions
- Net estate = home + other assets − debts; gifts to spouse/charity exempt; lifetime gifts added in full (no taper relief).
- NRB £325,000 and RNRB £175,000 from the UK rules file, doubled with a 100% transferred allowance; RNRB capped at the home value and tapered £1 per £2 above £2m.
- 36% applies when charity gifts are at least 10% of the baseline amount.
Worked example
Net estate £730,000. Nil-rate band 2 × £325,000 = £650,000; residence band 2 × £175,000 = £350,000 (within the home value).
Taxable = 730,000 − 650,000 − 80,000 (only £80,000 of the residence band is needed) = £0 — no inheritance tax.
The same estate for a single person: 730,000 − 325,000 − 175,000 = £230,000 × 40% = £92,000.
Frequently asked questions
Do I pay inheritance tax if everything goes to my wife or husband?
No — transfers between spouses and civil partners are fully exempt, and your unused allowances pass to them for use on their own death.
Does my pension count?
Currently most defined-contribution pensions pass outside the estate. From 6 April 2027 unused pension funds are expected to be included — add them to 'other assets' to see the effect.
Can I give my house to my children to avoid IHT?
Only if you move out or pay full market rent; otherwise it is a 'gift with reservation' and stays in your estate. Giving it away and surviving 7 years does work if you no longer benefit from it.
Who pays the tax and when?
The executors, from the estate, within 6 months of the end of the month of death — before probate is granted. Tax on property can be spread over 10 years with interest.
What is the inheritance tax threshold for 2026?
£325,000, plus £175,000 if the home goes to children or grandchildren; married couples can combine to £1 million.
How much can I inherit from my parents tax-free?
Up to £500,000 from one parent or £1 million from both if the home passes to you and the allowances are transferred.
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