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UK Inheritance Tax Calculator 2026/27

Find out if your estate is liable for IHT and how much is owed. Includes nil rate band, residence NRB and spouse exemption. Updated for 2026/27 HMRC thresholds.

✓ Last verified July 2026 — HMRC 2026/27 IHT thresholds
⚡ Quick Answer

UK inheritance tax is charged at 40% on your estate above £325,000 (nil rate band). With the residence nil rate band (£175,000 for a home passed to children/grandchildren), your threshold rises to £500,000. Married couples can combine allowances for up to £1,000,000 tax-free. Estates below these thresholds pay zero IHT.

Calculate UK Inheritance Tax
£
Property + savings + investments + other assets
£
Usually £325,000 if spouse had no estate. Enter 0 if single.
£
For residence nil rate band eligibility
£
Potentially exempt transfers within 7 years
£
Mortgages, loans, outstanding bills
Net Estate Value
—
After debts deducted
Total Tax-Free Threshold
—
NRB + RNRB + spouse NRB
Taxable Estate
—
Amount above threshold
Inheritance Tax Due
—
At 40%
Estate Passed to Heirs
—
After IHT paid
Effective IHT Rate
—
% of total estate

IHT Key Figures 2026/27

Nil Rate Band
£325,000
Per person (frozen to 2030)
Residence NRB
£175,000
Family home to descendants
Couples Threshold
£1,000,000
Combined NRB + RNRB
IHT Rate
40%
On amount above threshold
Charity Rate
36%
If 10%+ left to charity
Annual Gift Allowance
£3,000
Per year, IHT-free
IHT by Estate Value — Examples 2026/27

Single person, passing family home to children (NRB £325k + RNRB £175k = £500k threshold)

Estate ValueTaxable AmountIHT at 40%Heirs ReceiveEffective Rate
£400,000£0£0£400,0000%
£600,000£100,000£40,000£560,0006.7%
£800,000£300,000£120,000£680,00015%
£1,000,000£500,000£200,000£800,00020%
£1,500,000£1,000,000£400,000£1,100,00026.7%
£2,000,000£1,500,000£600,000£1,400,00030%
7-Year Taper Relief — Gift Tax Reduction
Years Between Gift & DeathIHT Rate on GiftTaper Relief
0–3 years40%0% relief
3–4 years32%20% relief
4–5 years24%40% relief
5–6 years16%60% relief
6–7 years8%80% relief
7+ years0%Completely exempt

💡 How to Reduce UK Inheritance Tax Legally

1. Make Gifts More Than 7 Years Before Death

Gifts made more than 7 years before death are completely exempt from IHT — these are called Potentially Exempt Transfers (PETs). Start gifting early to transfer wealth outside your estate. You can gift any amount, but it must survive the 7-year window to be fully exempt.

2. Use Annual Gift Exemptions

You can gift £3,000 per year IHT-free, plus small gifts of up to £250 per person, wedding gifts (£5,000 for children, £2,500 for grandchildren), and gifts from normal income. These are immediately outside your estate with no 7-year rule.

3. Leave 10% to Charity

If you leave at least 10% of your net estate to a UK registered charity, the IHT rate on the remainder drops from 40% to 36%. This can actually increase what your family receives depending on your estate size.

4. Put Life Insurance in Trust

If you hold a life insurance policy outside of a trust, the payout forms part of your estate and may be subject to IHT. Placing it in a trust means the payout goes directly to your beneficiaries without IHT and without probate delays.

5. Business and Agricultural Relief

Qualifying business assets and agricultural land may receive 100% IHT relief — meaning they pass to heirs completely free of inheritance tax. If you own a business or farm, specialist advice on structuring ownership is essential.

Frequently Asked Questions

How much is UK inheritance tax in 2026?
UK inheritance tax is charged at 40% on the value of your estate above the nil rate band of £325,000. With the residence nil rate band (£175,000 for a family home passed to direct descendants), the effective threshold is £500,000 per person. Married couples can combine to £1,000,000 tax-free. Source: HMRC 2026/27.
What is the nil rate band for IHT in 2026/27?
The nil rate band (NRB) for 2026/27 is £325,000 per person — frozen at this level until 2030. The residence nil rate band (RNRB) adds £175,000 when a family home passes to direct descendants. Combined, a single person can pass up to £500,000 tax-free; a married couple up to £1,000,000.
Do spouses pay inheritance tax on each other's estates?
No. Transfers between spouses or civil partners are completely IHT-exempt with no limit. The surviving spouse also inherits any unused nil rate band from the deceased — effectively doubling their threshold. This is called the transferable nil rate band.
When does the 7-year rule apply?
Gifts made more than 7 years before death are completely IHT-exempt (Potentially Exempt Transfers). If you die within 7 years, taper relief reduces IHT: 0-3 years: full 40%; 3-4 years: 32%; 4-5 years: 24%; 5-6 years: 16%; 6-7 years: 8%; 7+ years: 0%.
Are pensions included in your estate for IHT?
Currently (until April 2027), most pension funds are not included in your estate for IHT purposes — making them highly tax-efficient for passing wealth. From April 2027, unused pension funds will be included in estates for IHT. If you have significant pension savings, review your estate plan before this change takes effect.
How do I pay inheritance tax?
IHT must normally be paid by the end of the sixth month after death. HMRC charges interest on late payments. The executor of the estate is responsible for paying IHT before probate is granted. For property that takes time to sell, HMRC allows instalment payments over 10 years on qualifying assets.

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Disclaimer: This calculator is for informational purposes only. IHT rules are complex and depend on individual circumstances. Always consult a qualified solicitor or financial adviser for estate planning advice. Source: HMRC — Last verified July 2026.