Finance & Business
Inheritance Tax Calculator UK
Calculate how much inheritance tax (IHT) is due on your estate. Covers the nil-rate band, residence nil-rate band, spouse and civil partner exemptions, and charitable giving relief.
Enter your estate details to calculate your inheritance tax liability.
Related to Inheritance Tax Calculator UK
Inheritance Tax (IHT) in the UK is charged at 40% on the portion of a deceased person's estate that exceeds their available tax-free allowances. This calculator applies the current rules to estimate the IHT liability on an estate, taking into account the Nil-Rate Band, the Residence Nil-Rate Band, transferable allowances for surviving spouses, charitable gifts, and the seven-year rule for lifetime gifts.
Nil-Rate Band (NRB)
Every individual has a Nil-Rate Band of £325,000 — the threshold below which no IHT is charged. The NRB has been frozen at this level since 2009 and is confirmed to remain frozen until at least 2030. Only the value of the estate above the NRB is subject to the 40% rate. If a person's estate is worth £525,000 and they have a full NRB, the taxable estate is £200,000, resulting in an IHT bill of £80,000.
Residence Nil-Rate Band (RNRB)
An additional allowance of £175,000 — the Residence Nil-Rate Band — applies when a main residence is passed to direct descendants (children, grandchildren, or stepchildren). The RNRB is tapered for larger estates: it is reduced by £1 for every £2 by which the net estate exceeds £2,000,000, meaning the RNRB is fully withdrawn once the estate reaches £2,350,000. The RNRB is also frozen until at least 2030.
Transferable Allowances and the Seven-Year Rule
When one spouse or civil partner dies without using all of their NRB or RNRB, the unused percentage can be transferred to the surviving partner's estate. In the most common case — where the first spouse leaves everything to the survivor — both the full NRB (£325,000 × 2 = £650,000) and the full RNRB (£175,000 × 2 = £350,000) are available on the second death, giving a combined allowance of up to £1,000,000. Gifts made more than seven years before death are generally exempt from IHT; gifts made within seven years may be subject to taper relief on a sliding scale. If 10% or more of the net estate is left to a registered charity, the IHT rate on the remainder reduces from 40% to 36%.
The results show the total taxable estate after deducting available allowances, the IHT rate that applies, and the resulting tax liability. A result of "nil IHT due" means the estate falls entirely within the combined NRB and RNRB, so no tax is payable — not that the estate is exempt from assessment.
Using the NRB and RNRB Together
A single person who owns their home and passes it to a child or grandchild can shelter up to £500,000 from IHT (£325,000 NRB + £175,000 RNRB). A married couple or civil partnership where the first partner's allowances are fully transferred can shelter up to £1,000,000. Estates above these thresholds will pay 40% on the excess — or 36% if at least 10% is donated to charity.
RNRB Taper and Large Estates
For estates worth more than £2,000,000, the RNRB begins to be clawed back. A net estate of £2,175,000 retains only £87,500 of RNRB (half the full amount). Estates exceeding £2,350,000 lose the RNRB entirely and can shelter only £325,000 per person (or £650,000 for a couple). This makes IHT planning particularly important for estates in the £2m–£2.5m range.
Practical planning options to reduce a future IHT bill include making regular gifts out of surplus income (which are immediately exempt), using the annual £3,000 gift exemption, setting up a trust, taking out a whole-of-life insurance policy written in trust to cover the anticipated IHT liability, and maximising charitable bequests to access the reduced 36% rate. These steps should be taken in consultation with a qualified financial adviser or solicitor, as the rules are complex and highly dependent on individual circumstances.
1. What is the nil-rate band and how does it work?
The nil-rate band (NRB) is the amount of a person's estate that can be passed on free of Inheritance Tax. The current NRB is £325,000 and is frozen until at least 2030. It applies to the total net value of the estate — that is, all assets including property, savings, investments, and personal possessions, minus any debts and liabilities. Only the value above the NRB is taxed at 40%. Each individual has their own NRB, and any unused portion can be transferred to a surviving spouse or civil partner.
2. Does my spouse have to pay inheritance tax when I die?
No — transfers between spouses and civil partners who are both UK domiciled are fully exempt from IHT, regardless of the value involved. This means you can leave your entire estate to your spouse with no IHT due on the first death. The practical consequence is that both nil-rate bands and both residence nil-rate bands become available on the second death, allowing up to £1,000,000 to be passed to children or grandchildren free of tax. This exemption does not apply to unmarried partners, regardless of how long the relationship has lasted.
3. What is the residence nil-rate band?
The Residence Nil-Rate Band (RNRB) is an additional IHT-free allowance of £175,000, introduced to help families pass on their main home. It applies when a qualifying residential property is left to direct descendants — including children, grandchildren, stepchildren, and adopted children. The property does not need to be the family home at the time of death; if the deceased sold their home and downsized, the RNRB can still be claimed on the proceeds under the "downsizing addition" rules. The RNRB is tapered for estates over £2,000,000 and is reduced to nil for estates above £2,350,000.
4. Can I reduce my inheritance tax bill through gifting?
Yes, gifting is one of the most effective IHT planning tools. Gifts made more than seven years before death fall outside the estate entirely and are free of IHT. Gifts made within seven years are known as potentially exempt transfers (PETs) and may be subject to taper relief: no additional tax applies after seven years, 20% of the IHT rate between six and seven years, 40% between five and six years, and so on. Certain gifts are immediately exempt regardless of when they are made: the £3,000 annual exemption, small gifts of up to £250 per recipient, wedding gifts up to specified limits, and gifts made out of normal expenditure from income.
5. What is the scientific source for this calculator?
This calculator is based on the Inheritance Tax Act 1984 as amended, including changes introduced by the Finance Act 2017 (which established the Residence Nil-Rate Band), the Finance Act 2020 (which froze the NRB and RNRB until 2026), and subsequent Budget announcements extending those freezes to 2030. The 40% standard rate and 36% reduced rate for charitable estates are set out in sections 7 and 23A of the Inheritance Tax Act 1984. The taper relief schedule for gifts within seven years is set out in section 7(4) and Schedule 1 of the same Act. The RNRB taper threshold and withdrawal rate are specified in sections 8D–8M of the Inheritance Tax Act 1984 as inserted by the Finance (No. 2) Act 2015.