Inheritance Tax Calculator UK
Estimate the inheritance tax (IHT) an estate would owe in 2026/27. Enter the estate value, the home and who inherits it to see the tax-free threshold, the taxable amount and the 40% bill.
Last updated 2 July 2026 · Written and reviewed by Mustafa Bilgic
Inheritance tax calculator
Nil-rate bands, the £2m taper and the 36% charity rate.
Estimate only — figures use the latest published UK rates. Always confirm on GOV.UK.
How is inheritance tax worked out?
Inheritance tax is charged at 40% on the part of an estate above its tax-free threshold. Everyone gets a standard nil-rate band of £325,000. If a home is left to children or grandchildren (direct descendants), the residence nil-rate band adds up to £175,000 more — capped at the value of the home itself. Anything left to a spouse or civil partner is exempt entirely, however large. Both bands are frozen until April 2031, and the rules are set out on GOV.UK.
On a £600,000 estate including a £300,000 home left to the children, the tax-free threshold is £500,000 (£325,000 + £175,000). Tax is 40% of the remaining £100,000 — an IHT bill of £40,000, leaving £560,000 for the beneficiaries.
2026/27 thresholds at a glance
| Allowance or rule | 2026/27 |
|---|---|
| Standard nil-rate band | £325,000 |
| Residence nil-rate band (home to direct descendants) | Up to £175,000 |
| Married couple / civil partners, combined | Up to £1,000,000 |
| Taper threshold | £2,000,000 — lose £1 of residence band per £2 over |
| Rate above the threshold | 40% |
| Rate if 10%+ of the net estate goes to charity | 36% |
Married couples: the £1 million allowance
Whatever passes to a surviving spouse or civil partner is exempt from inheritance tax, and any unused bands transfer to them. On the second death, the estate can then use two nil-rate bands and two residence nil-rate bands — 2 × £325,000 plus 2 × £175,000 — so a married couple can pass on up to £1 million before any tax is due, provided the home goes to children or grandchildren. Tick the transferred-allowance box in the calculator to model this.
The £2 million taper
Larger estates lose the residence nil-rate band gradually. For every £2 the estate exceeds £2 million, £1 of residence nil-rate band disappears. A £2.2 million estate, for example, loses £100,000 of it. The standard £325,000 band is never tapered. Because the £2 million test looks at the whole estate, releasing equity or spending in retirement can change the position — our equity release calculator shows how borrowing against the home reduces what is left in the estate.
Gifts and the seven-year rule
Gifts made more than seven years before death generally fall outside the estate altogether. Gifts made within seven years can be counted back in, although taper relief may reduce the tax charged on gifts made between three and seven years before death. Pensions have their own rules on death, so it is worth looking at how withdrawals interact with your estate — see our pension drawdown calculator.
Who pays, and when?
Inheritance tax is normally due by the end of the sixth month after the month of death, and is usually paid by the executor out of the estate before anything reaches the beneficiaries. Reasonable debts owed by the estate are settled first — you can gauge one common cost with our funeral cost calculator. With the thresholds frozen until April 2031 while house prices and savings grow, more ordinary families are being pulled into paying IHT each year — which is exactly why it pays to run the numbers early. Valuing the estate correctly matters too; GOV.UK explains how.
Frequently asked questions
What is the inheritance tax threshold for 2026/27?
The standard nil-rate band is £325,000. If a home is left to children or grandchildren, the residence nil-rate band adds up to £175,000 more, capped at the value of the home — a threshold of up to £500,000 for one person. Both bands are frozen until April 2031.
How do married couples pass on £1 million tax-free?
Anything left to a spouse or civil partner is exempt from inheritance tax, and any unused bands transfer to the survivor. On the second death the estate can use two nil-rate bands and two residence nil-rate bands — 2 × £325,000 plus 2 × £175,000, up to £1 million — provided the home goes to children or grandchildren.
What happens if the estate is worth more than £2 million?
The residence nil-rate band is tapered away: for every £2 the estate exceeds £2 million, £1 of residence nil-rate band is lost. For example, a £2.2 million estate loses £100,000 of it. The standard £325,000 nil-rate band is not tapered.
How does the 7-year rule on gifts work?
Gifts made more than seven years before death generally fall outside the estate, so no inheritance tax is due on them. Gifts made within seven years can be brought back into the calculation, though taper relief may reduce the tax charged on gifts made between three and seven years before death.
When does the 36% rate apply and when is IHT paid?
If at least 10% of the net estate is left to charity, the rate on the taxable part falls from 40% to 36%, and the charity gift itself is tax-free. Inheritance tax is normally due by the end of the sixth month after the month of death, and is usually paid by the executor from the estate before anything is passed to beneficiaries.