£600,000
£500,000
£100,000
£40,000
£560,000
6.7%
£6,667
£600,000
£500,000
£100,000
£40,000
£560,000
6.7%
£6,667
Inheritance Tax (IHT) is one of the most significant financial considerations in estate planning in the United Kingdom. Charged at a flat rate of 40% on the value of a deceased person's estate above the applicable threshold, IHT can substantially reduce the wealth passed on to beneficiaries. Understanding how it is calculated — and what reliefs are available — is essential for anyone involved in estate planning, whether as a testator, executor, or beneficiary.
The UK Inheritance Tax Calculator provides a clear, step-by-step estimate of your IHT liability based on the current rules set by HM Revenue and Customs (HMRC). It incorporates all three key thresholds: the standard nil-rate band (NRB) of £325,000, the residence nil-rate band (RNRB) of £175,000 (available when a main residence is left to direct descendants), and any chargeable gifts made within the seven years prior to death.
The nil-rate band is the amount of an estate that is entirely free from IHT. As of 2024–25, this stands at £325,000 per individual and has been frozen until at least April 2028. Married couples and civil partners can pass their unused nil-rate band to a surviving spouse, potentially doubling the threshold to £650,000. The residence nil-rate band is an additional £175,000 available when a qualifying residential property is left to direct descendants such as children or grandchildren, bringing the combined threshold to £500,000 per individual or £1,000,000 for a couple.
Debts and liabilities — including mortgages, outstanding loans, and funeral expenses — are deducted from the gross estate before IHT is assessed. Transfers to a UK-domiciled spouse or civil partner, and gifts to qualifying charities, are entirely exempt from IHT and are also deducted before the calculation begins.
One of the most commonly overlooked aspects of IHT is the seven-year rule. Chargeable gifts made within seven years of death are added back to the estate for the purposes of calculating the available nil-rate band. If the cumulative gifts exceed the nil-rate band, a taper relief may reduce the tax owed on the gifts themselves, but the estate's nil-rate band is still reduced pound for pound. This calculator adds those gifts back to give a more accurate picture of the total IHT exposure.
It is important to note that this calculator provides an estimate for planning purposes only. IHT law is complex, with numerous additional reliefs — such as Business Property Relief, Agricultural Property Relief, and heritage property exemptions — that are not captured in this general tool. Always seek professional advice from a qualified solicitor or tax adviser before making estate planning decisions.
The calculator follows the standard HMRC method for computing IHT liability:
If the taxable estate shows £0, the estate falls entirely within the available nil-rate bands and no IHT is payable. An effective rate significantly below 40% indicates that substantial portions of the estate are sheltered by reliefs or exempt transfers. A high effective rate — approaching 40% — suggests limited use of allowances and may indicate significant planning opportunities. Consider strategies such as making use of annual gifting allowances (£3,000 per year per person), setting up trusts, or increasing charitable giving to reduce taxable exposure over time.
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An estate worth £750,000 with a £50,000 mortgage and a qualifying residence left to children. The combined NRB of £500,000 shelters a significant portion, leaving £200,000 taxable at 40% — an IHT bill of £80,000.
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A £900,000 estate where £150,000 in chargeable gifts were made in the last seven years. The gifts use up £150,000 of the nil-rate band, increasing the taxable portion to £550,000 and raising the IHT bill to £220,000.
The standard nil-rate band is £325,000 per individual and has been frozen at this level until April 2028. An additional residence nil-rate band of £175,000 applies when a main home is passed to direct descendants, bringing the combined threshold to £500,000 per person.
Yes. When a married couple or civil partners are involved, any unused nil-rate band from the first death can be transferred to the surviving spouse's estate. This can potentially double the available threshold to £1,000,000 when both the standard NRB and RNRB are transferred.
Gifts made within seven years of death are called 'potentially exempt transfers' (PETs) and are added back into the estate for IHT purposes. If the deceased died within three years of making the gift, the full 40% rate applies. Between three and seven years, taper relief reduces the tax on the gift itself, but the nil-rate band is still reduced.
No. Gifts to UK-registered charities are completely exempt from IHT. Additionally, if 10% or more of the net estate is left to charity, the remaining taxable estate is taxed at the reduced rate of 36% rather than 40%.
No. The RNRB applies only to a qualifying residential property that was the deceased's home at some point and is left to direct descendants — children, grandchildren, or stepchildren. It does not apply to buy-to-let properties or homes left to more distant relatives.
Legitimate deductions include outstanding mortgages, personal loans, credit card debts, utility bills, and reasonable funeral expenses. Business debts can also be deducted against business assets. All deductions must be documented and reported to HMRC.
IHT must generally be paid within six months of the end of the month in which the person died. Interest is charged on unpaid amounts after this deadline. Executors typically pay IHT from estate funds before a grant of probate is issued, though HMRC offers instalment plans for certain illiquid assets such as property and business interests.
This calculator is designed for straightforward estates and provides a useful planning estimate. It does not account for Business Property Relief, Agricultural Property Relief, trusts, overseas assets, or heritage exemptions. For complex estates, always consult a qualified solicitor or chartered tax adviser.
Roboculator Team
The Roboculator Team explains calculations, planning tools, and practical formulas in clear language for real-life situations.
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