ganak.appInheritance Tax Calculator
Free UK inheritance tax calculator. Estimate IHT on your estate with nil-rate band, RNRB, spouse exemption, charity rate, taper relief on gifts, and transferable allowances. Updated for 2025-26.
Included in estate total, for RNRB calculation
Qualifies for Residence Nil-Rate Band (RNRB)
Exempt from IHT. ≥10% of baseline = 36% rate
100% relief on qualifying assets
Enter amount and how many years ago
Allowances & Thresholds
How your tax-free threshold is calculated
| Allowance | Amount |
|---|---|
| Nil-Rate Band (NRB) | £325,000 |
| Residence NRB (RNRB) | £175,000 |
| Threshold for Estate | £500,000 |
Estate Breakdown
Step-by-step calculation from gross estate to IHT payable
| Item | Amount |
|---|---|
| Gross Estate | £500,000 |
| Less: Debts & Funeral Costs | −£10,000 |
| Net Estate | £490,000 |
| Tax-Free Threshold | −£500,000 |
| Taxable Estate | £0 |
| IHT at 40% | £0 |
What Is Inheritance Tax?
UK tax on the estate of someone who has died — charged at 40% above the tax-free threshold
Inheritance Tax (IHT) is charged on the total value of someone's estate — including property, savings, investments, and possessions — when they die. Only the portion above the tax-free threshold is taxed.
Standard Rate
40%
On everything above the nil-rate band
Charity Rate
36%
If ≥10% of baseline left to charity
Did you know? Only around 4% of UK deaths result in an IHT charge. However, rising property prices are pulling more estates above the threshold each year — HMRC collected a record £7.5 billion in IHT in 2023-24.
Nil-Rate Band & Residence Nil-Rate Band
The two tax-free allowances that determine your IHT threshold — up to £500,000 per person
£325,000
Basic tax-free allowance. Frozen since 2009, expected to remain until April 2028. Everyone gets this regardless of circumstances.
£175,000
Additional allowance if your main home is left to direct descendants (children, grandchildren, step-children).
Combined Thresholds:
Single: £325K + £175K = £500,000
Couple: £650K + £350K = £1,000,000RNRB Taper: For estates over £2,000,000, the RNRB reduces by £1 for every £2 above this threshold. It is completely lost at £2,350,000 (single) or £2,700,000 (with transferred RNRB from a spouse).
Gifts & the 7-Year Rule
How gifts are taxed with taper relief, plus annual exemptions you can use each year
Gifts made more than 7 years before death are completely exempt. Gifts within 7 years are "potentially exempt transfers" (PETs) — if they exceed the nil-rate band, taper relief reduces the tax owed depending on when the gift was made.
| Years Before Death | Taper Relief | Effective IHT Rate |
|---|---|---|
| 0 – 3 years | 0% | 40% |
| 3 – 4 years | 20% | 32% |
| 4 – 5 years | 40% | 24% |
| 5 – 6 years | 60% | 16% |
| 6 – 7 years | 80% | 8% |
| 7+ years | 100% | 0% (exempt) |
£3,000
Annual Exemption
Per person, per tax year
£250
Small Gift Limit
Per recipient, per year
£5,000
Wedding Gift
From a parent (£2.5K grandparent)
Spouse Exemption & Transferable Allowances
Unlimited spouse exemption and how unused allowances transfer between married couples
Spouse Exemption
Unlimited
Assets left to a spouse or civil partner who is a long-term UK resident are completely exempt from IHT. No upper limit applies.
Transferable Bands
Up to £1,000,000
Unused NRB and RNRB from a deceased spouse can be transferred — potentially doubling the threshold.
36% Charity Rate
If at least 10% of the baseline amount is left to charity, the IHT rate drops from 40% to 36%. This 4% saving can mean leaving more to charity actually costs beneficiaries less than paying the full 40% tax.
Baseline = Net Estate − NRB (after gifts) − Spouse Exemption − Reliefs
If Charity ≥ 10% × Baseline → IHT rate = 36% instead of 40%Business Property Relief (BPR)
50% or 100% relief on qualifying business assets — one of the most powerful IHT planning tools
- Sole trader businesses
- Partnership interests
- Unquoted company shares
- AIM-listed shares (held 2+ years)
- Controlling interest in a quoted company
- Land/buildings used by a partnership
- Machinery used in the business
From April 2026: BPR and Agricultural Property Relief will have a combined allowance of £2.5 million at 100% relief, with 50% relief on the value above £2.5 million. AIM shares will receive 50% relief only.
Common Mistakes to Avoid
Errors that frequently lead to overpaying IHT or unexpected tax bills for beneficiaries
Forgetting life insurance payouts not held in trust — these form part of the taxable estate
Not claiming the transferred NRB/RNRB from a deceased spouse — this can double the threshold to £1M
Assuming the RNRB always applies — it tapers for estates over £2M and requires the home to go to direct descendants
Not accounting for gifts within 7 years — these are added back to the estate for IHT purposes
Overlooking the 36% charity rate — leaving 10% to charity can sometimes save beneficiaries money
Forgetting joint assets — the deceased's share of jointly-owned property is included in their estate
Frequently Asked Questions
Common questions and detailed answers
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