IHT quick reference (individual, no RNRB)
| Estate Value | Taxable Amount | IHT at 40% |
|---|---|---|
| £325,000 | £0 | £0 |
| £400,000 | £75,000 | £30,000 |
| £500,000 | £175,000 | £70,000 |
| £750,000 | £425,000 | £170,000 |
| £1,000,000 | £675,000 | £270,000 |
| £1,500,000 | £1,175,000 | £470,000 |
| £2,000,000 | £1,675,000 | £670,000 |
How UK inheritance tax works
Inheritance Tax (IHT) is paid on the value of a person's estate when they die, if it exceeds certain thresholds. The estate includes property, savings, investments, and possessions, minus any debts and funeral costs.
The nil-rate band (NRB)
Every individual has a nil-rate band of £325,000. Anything within this threshold is tax-free. This allowance has been frozen at £325,000 since 2009 and is set to stay at this level until 5 April 2031.
The residence nil-rate band (RNRB)
An additional £175,000 is available if you leave your main home (or a share of it) to direct descendants, including children, stepchildren, adopted children, or grandchildren. The RNRB is capped at the value of the property being passed on.
Transferable allowances for married couples
If your spouse or civil partner died and did not use all of their NRB and RNRB, the unused portion can be added to your estate's thresholds. This means a surviving spouse can potentially have up to £1,000,000 in combined allowances.
The RNRB taper
For estates worth more than £2 million, the RNRB is reduced by £1 for every £2 above this threshold. For a single person, the full £175,000 RNRB is completely removed once the estate reaches £2,350,000.
Charity relief
If 10% or more of the net estate (the amount above all nil-rate bands) is left to qualifying charities, the IHT rate drops from 40% to 36%. This means giving more to charity can sometimes reduce the overall tax bill for beneficiaries as well.
Worked examples for 2026/27
Each example was run through the calculator above with the inputs shown. They assume no gifts in the seven years before death, no debts beyond those already taken off the estate value, nothing left to charity, and no business or agricultural property.
Single, £600,000 estate left to a niece and nephew
The estate includes a £300,000 home. Nieces and nephews are not direct descendants, so the residence nil-rate band is £0 and only the £325,000 nil-rate band applies. £275,000 is taxed at 40%, giving £110,000.
Widower, £1,100,000 estate, home left to his children
His wife died first and left everything to him, so none of her allowances were used. Her nil-rate band and residence nil-rate band transfer to his estate, giving £1,000,000 of allowances in total. The remaining £100,000 is taxed at 40%: £40,000.
Widow, £2,300,000 estate: the taper bites
The same transferred allowances apply, but the estate is £300,000 over the £2 million taper threshold. The residence nil-rate band loses £1 for every £2 over, falling from £350,000 to £200,000. The taxable estate is £1,450,000 and the bill £580,000.
Rules that change the answer
Gifts in the seven years before death
Gifts are added back to the estate if the giver dies within seven years. Where those gifts total more than £325,000, tax on them is reduced by taper relief: 32% for gifts made 3 to 4 years before death, 24% at 4 to 5 years, 16% at 5 to 6 years and 8% at 6 to 7 years. Each tax year you can give £3,000 in total free of this rule, plus any number of gifts up to £250 per person, wedding gifts of up to £5,000 to a child, and regular gifts out of surplus income (GOV.UK: Inheritance Tax, checked 30 October 2026).
Thresholds are frozen to April 2031
The £325,000 nil-rate band, the £175,000 residence nil-rate band and the £2 million taper point are fixed up to and including 2030/31, as is the combined £1 million allowance for 100% Agricultural and Business Property Relief (HMRC policy paper: Inheritance Tax thresholds, checked 30 October 2026).
Pensions count from 6 April 2027
Most unused pension funds and pension death benefits come into the estate for deaths from 6 April 2027. Death in service benefits from a registered scheme stay outside it (HMRC: unused pension funds and death benefits, checked 30 October 2026). If you are planning ahead, add the pension pot to the estate value to see the effect.
Payment is due before probate
Inheritance Tax is due by the end of the sixth month after the death, and HMRC charges interest after that. Some of it usually has to be paid before the executors can get probate (GOV.UK: Pay your Inheritance Tax bill, checked 30 October 2026).
Common mistakes
Thinking a home left to a spouse wastes the residence band. Everything left to a spouse or civil partner is exempt, and the unused bands pass to their estate, as the widower example shows.
Using the £2 million taper on the taxable amount. The taper is measured on the whole estate before the nil-rate bands are taken off, so a £2.3 million estate loses £150,000 of residence band even though far less than £2 million is taxable.
Leaving out lifetime gifts. A large gift to a child five years before death still counts. Add it to the estate value for a rough figure; taper relief can lower the tax on it.
How this calculator works: it gives each estate the £325,000 nil-rate band, doubled if a spouse’s band transfers, and the residence band of up to £175,000 (or £350,000 with a transfer) if a home goes to direct descendants, capped at the home’s value and tapered above £2 million. The rest is taxed at 40%, or 36% when 10% or more goes to charity. It does not model lifetime gifts, reliefs or pensions. Figures were last checked against GOV.UK on 30 October 2026. Every source is listed on our methodology page.