Estimate the Inheritance Tax due on an estate. Each person can pass on £325,000 tax-free, plus £175,000 more when a home goes to children or grandchildren. Anything above that is taxed at 40%. A £600,000 estate with a £400,000 home left to the children pays £40,000.
Inheritance Tax Calculator
Nil-rate band, residence nil-rate band and transfers between spouses · Updated 12 October 2026
- Net estate
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- Nil-rate band available
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- Residence nil-rate band available
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- Spouse and charity exemptions
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- Taxable amount
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- Rate
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- Estate after Inheritance Tax
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A simplified estimate. Business and agricultural relief, trusts, gifts with reservation and the taper relief on large gifts are not included.
Inheritance Tax thresholds
| Allowance or rate | Amount |
|---|---|
| Nil-rate band | £325,000 |
| Residence nil-rate band (home left to direct descendants) | £175,000 |
| Combined for a married couple or civil partners | Up to £1,000,000 |
| Residence nil-rate band taper starts at | Estates over £2,000,000 |
| Standard rate above the thresholds | 40% |
| Reduced rate if 10% or more goes to charity | 36% |
How it is worked out
- Add up everything the person owned and take off debts and funeral costs.
- Anything left to a spouse, civil partner or charity is tax-free.
- The nil-rate band covers the first £325,000. Gifts made in the 7 years before death use it up first.
- The residence nil-rate band adds up to £175,000 when a home, or a share of one, goes to children, stepchildren, adopted children or grandchildren.
- Any unused allowances pass to a surviving spouse or civil partner, so the second estate can have up to £650,000 plus £350,000.
- Tax is charged at 40% on the rest, or 36% if at least 10% of the net estate goes to charity.
Examples
| Situation | Allowances used | Taxable | Inheritance Tax |
|---|---|---|---|
| £450,000 estate, no home left to children | £325,000 | £125,000 | £50,000 |
| £600,000 estate, £400,000 home to children | £325,000 + £175,000 | £100,000 | £40,000 |
| £700,000 estate, £350,000 home to children | £325,000 + £175,000 | £200,000 | £80,000 |
| £900,000 estate, second death, home to children, all allowances transferred | £650,000 + £350,000 | £0 | £0 |
| £1,000,000 estate, £300,000 to spouse | £325,000 | £375,000 | £150,000 |
| £2,200,000 estate, £800,000 home to children | £325,000 + £75,000 (tapered) | £1,800,000 | £720,000 |
Changes to know about
- Since 6 April 2026, 100% business and agricultural property relief applies to the first £2.5 million of qualifying assets combined; above that the relief is 50%. AIM shares get 50% relief.
- From 6 April 2027, most unused pension funds and death benefits will count as part of the estate for Inheritance Tax.
- The nil-rate band and residence nil-rate band are frozen at £325,000 and £175,000 until 5 April 2031.
Gifts and the 7-year rule
Gifts you make are free of Inheritance Tax if you live for 7 years afterwards. You can also give away £3,000 a year (plus last year’s unused £3,000), unlimited small gifts of up to £250 per person, and regular gifts out of surplus income without them counting at all.
FAQs
When does Inheritance Tax have to be paid?
By the end of the sixth month after the death. Interest is charged after that. Tax on some assets, such as property, can be paid in instalments over 10 years.
Does a home left to a nephew qualify for the residence band?
No. The residence nil-rate band only applies to direct descendants: children (including step, adopted and foster children) and their descendants, plus their spouses or civil partners.
Related calculators
- Stamp Duty CalculatorSDLT when buying a home in England
- Savings Interest Tax CalculatorTax on interest in 2026/27
Sources
- GOV.UK: Inheritance Tax
- GOV.UK: Inheritance Tax on gifts
- GOV.UK: Agricultural and business property relief changes
- legislation.gov.uk: Finance Act 2026, Schedule 12
Figures current as of 12 October 2026
Each formula is checked against a separate test sheet with at least three worked examples. Results are estimates based on the numbers you enter and the published rules; your actual figures may differ. This is general information, not financial or tax advice.
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