United Kingdom · 2026/27
UK Inheritance Tax Calculator
Build the estate from its assets and debts, then see the Inheritance Tax — with the £325,000 nil-rate band, transferable bands, the £175,000 residence nil-rate band (and its £2m taper), spouse and charity exemptions, the reduced 36% charity rate and 7-year gift taper relief.
How Inheritance Tax is worked out
Inheritance Tax is charged at 40% on the value of an estate above its tax-free nil-rate bands. The standard nil-rate band is £325,000. On top, a residence nil-rate band of up to £175,000 applies when a home passes to direct descendants — but it tapers away by £1 for every £2 the estate exceeds £2 million.
Spouses and transferable bands
Anything left to a spouse or civil partner is exempt, and crucially, unused nil-rate bands transfer to them. A surviving spouse can therefore have up to £650,000 of standard band and £350,000 of residence band — up to £1 million tax-free — which is why many couples' estates pay nothing.
Charity and the 7-year rule
Gifts to charity are exempt, and leaving 10% or more of the estate above the bands to charity cuts the rate on the rest from 40% to 36%. Gifts made in the 7 years before death can be brought back in; they use the nil-rate band first, and any excess is taxed with taper relief reducing the tax on gifts made 3 to 7 years before death.
Frequently asked questions
How much is inheritance tax?
40% on the estate above the nil-rate bands (£325,000, plus up to £175,000 residence band when a home passes to descendants). Spouse and charity gifts are exempt.
What is the residence nil-rate band?
An extra £175,000 allowance when your home goes to children or grandchildren. It reduces by £1 for every £2 the estate is over £2 million, and unused band transfers to a surviving spouse.
How does the 7-year gift rule work?
Gifts in the 7 years before death can be added back, using the nil-rate band first. Tax on any excess is reduced by taper relief for gifts made 3 to 7 years before death.
How do I reduce inheritance tax?
Common routes include using both spouses' bands, lifetime gifting, leaving 10% to charity for the 36% rate, and reliefs for business or agricultural assets — see our
IHT-reduction guide.
Related
Educational estimate — not tax or legal advice. UK 2026/27: nil-rate band £325,000, residence nil-rate band £175,000 (tapered £1 per £2 over £2m), 40% rate (36% where ≥10% of the estate above the bands passes to charity), 7-year gift taper. It doesn't model trusts, business or agricultural property relief, gifts with reservation, or the precise ordering of multiple lifetime transfers. Estate planning should be done with a solicitor or qualified adviser.