Inheritance Tax Calculator

How UK Inheritance Tax Works

Inheritance tax (IHT) is charged at 40% on the portion of a UK estate that exceeds the available allowances. Most estates pay no IHT at all because the allowances — the nil-rate band and the residence nil-rate band — combined can shelter up to £500,000 per individual, or up to £1,000,000 for a married couple using transferable allowances. IHT only becomes a real issue for estates above those thresholds, which is why planning ahead matters most for homeowners with significant property wealth.

What Is the UK Inheritance Tax Threshold?

Each individual has a standard nil-rate band (NRB) of £325,000 — no IHT is paid on the first £325,000 of their estate. On top of that, if a main residence is passed to direct descendants (children, grandchildren, or their spouses), a residence nil-rate band (RNRB) of £175,000 applies. Together, an individual can pass on up to £500,000 tax-free. Married couples and civil partners can transfer any unused allowance to the surviving spouse, potentially doubling the combined allowance to £1,000,000. The thresholds are frozen at these levels until April 2030, which means more estates will be dragged into the IHT net as property prices rise.

What Is the Inheritance Tax Rate in the UK?

The standard rate is 40% on the portion of the estate that exceeds the available allowances (NRB + RNRB + spouse transfer). A reduced rate of 36% applies if at least 10% of the net estate is left to qualifying charities — the calculator does not model this automatically; if you are leaving significant amounts to charity, speak to a solicitor about whether the 36% rate applies. Transfers between spouses and civil partners are entirely exempt from IHT, regardless of size, which is why the order in which assets pass matters as much as the total.

Does the Residence Nil-Rate Band Taper for Large Estates?

Yes. The RNRB of £175,000 is reduced by £1 for every £2 the estate exceeds £2,000,000, reaching zero for estates of £2,350,000 or more. The standard NRB (£325,000) is not tapered — it remains available regardless of estate size. The calculator automatically applies the taper if your estate value exceeds £2m, and shows in the "Allowances used" panel exactly how much RNRB was available after tapering. If you have a £2.2m estate with a £400k main residence passing to children, the RNRB you can actually use is £100,000 (not the headline £175,000) because of the taper.

How Can I Reduce My Inheritance Tax Bill?

Common strategies include: making gifts more than 7 years before death (the 7-year taper rule applies for gifts between 3 and 7 years), leaving 10%+ of the estate to charity to qualify for the 36% rate, using the annual £3,000 gift exemption (which carries forward one year if unused), making wedding gifts within the permitted limits, putting money into a pension or trust (specialist advice needed for trusts), and ensuring your spouse inherits first to use their allowance. The calculator shows the baseline IHT bill — for actual planning, consult a solicitor or STEP-registered trust and estate practitioner, because the rules around gifts, trusts, and the 7-year rule are intricate and mistakes can be expensive.

What Counts as the Estate?

The estate includes everything the deceased owned: property (including the main residence), savings, investments, possessions, life insurance policies written in trust (or paid to the estate), business interests, and certain gifts made within 7 years of death. It does NOT include assets passing directly to a spouse or civil partner, gifts to UK-registered charities, or assets held in certain qualifying trusts. The calculator asks for total estate value and the value passing to spouse separately so you can model the IHT position accurately.

Related Tools

• LISA Calculator — a tax-efficient savings wrapper that can form part of an estate plan.
• Pension Calculator — pensions often fall outside the IHT estate.
• ISA Calculator — ISAs do form part of the estate; useful for planning.