Inheritance Tax Calculator 2026/27: Estimate the IHT on an Estate

Use the inheritance tax calculator above

Pop the estate's total value into the inheritance tax calculator at the top of this page, add the home value and any recent gifts, and it will estimate the taxable portion and a likely IHT figure. Treat the result as a first sketch, not the final number an executor submits to HMRC. The sections below explain exactly how the maths works, so you can see why the calculator lands where it does and where a real estate can differ.

What inheritance tax actually is

Inheritance tax is a charge on the value of everything someone owned when they died, after debts and funeral costs are deducted. That includes the house, money in the bank, ISAs and other investments, cars, valuables, and in many cases gifts made in the years before death. Pensions and some business or agricultural assets follow their own rules and sit outside the simple version of the sum.

The thing most people get wrong is assuming IHT applies to the whole estate. It does not. Every estate gets a tax-free band first, and only the value above that band is taxed. A large share of estates pay nothing at all because they fall under the threshold. Inheritance tax is also one tax that works the same across England, Scotland, Wales and Northern Ireland. Unlike income tax, where Scotland sets its own bands, or property purchase tax, where SDLT, LBTT and LTT differ by nation, IHT is a single UK-wide tax administered by HMRC.

Nil-rate band and residence nil-rate band

The tax-free part of an estate is made up of two allowances. The first is the standard nil-rate band, the slice of any estate that is free of inheritance tax. The second is the residence nil-rate band, an extra allowance that can apply when a home is left to direct descendants such as children, stepchildren, adopted children or grandchildren. The residence band is the part that catches people out, because it only applies to a home passing down the family line, and it is gradually withdrawn once an estate climbs above a high value threshold.

Two features make the bands more generous for couples. Anything left to a spouse or civil partner is normally exempt from IHT entirely, so no tax is due when the first partner dies. On top of that, any unused nil-rate band and unused residence nil-rate band can be transferred to the surviving spouse or civil partner. In practice that means a married couple or civil partners can often pass on a combined allowance that is double a single person's, which is why so many family homes escape the tax. The exact pound figures for both bands, the taper threshold and the rate of tax change at fiscal events, so always confirm the live 2026/27 amounts on the official source before relying on a number. You can check the current figures on the gov.uk inheritance tax pages.

How the inheritance tax calculator works

The core formula is simpler than it looks. In plain words:

• Step 1. Add up the estate: property, savings, investments, possessions, and gifts that still count.
• Step 2. Subtract debts, the mortgage and reasonable funeral costs to get the net estate.
• Step 3. Subtract the available allowances: the nil-rate band, plus the residence nil-rate band if a home passes to direct descendants, plus any band transferred from a late spouse.
• Step 4. Whatever is left is the taxable estate, and the inheritance tax rate is applied to that amount.

Written as a single line: IHT = (net estate − available nil-rate bands) × the IHT rate. If the net estate is smaller than the allowances available, the result is zero and there is no inheritance tax to pay. The inheritance tax calculator runs exactly this sequence: it nets off liabilities, applies the bands you qualify for, and taxes only the surplus.

One detail worth holding onto: there is a reduced rate of inheritance tax available when a set share of the estate is left to charity. Leaving enough to a registered charity can pull the rate on the rest of the estate down, which is why charitable giving features so heavily in estate planning. The calculator above keeps to the standard rate, so if a will includes a large charitable legacy, treat the estimate as a ceiling rather than the final figure.

Worked example: how the IHT sum comes together

Take Margaret, a widow in Leeds. Her husband died several years ago and left everything to her, so his full set of allowances transferred across. Her estate is made up of a house worth a meaningful sum, plus savings and investments, and she is leaving the home to her two children.

An executor would work through it like this. First, total the estate: the value of the house, the savings and the investments are added together. Second, deduct what is owed, in Margaret's case a small outstanding bill and the funeral costs, to reach the net estate. Third, apply the allowances. Because she is a widow leaving the home to her children, her estate can use her own nil-rate band and residence nil-rate band, plus the unused bands transferred from her late husband. Those combined allowances are subtracted from the net estate.

If the net estate sits below the combined allowances, the inheritance tax due is nil and the children inherit the lot. If it sits above, only the excess is taxed, and the inheritance tax is that excess multiplied by the standard IHT rate. The lesson from Margaret's case is that the transferred bands from a late spouse, plus the residence band on a home passing to children, frequently lift a seemingly large estate clear of any tax. Run your own figures through the calculator above, then confirm the current band amounts on gov.uk before treating the result as firm.

Gifts and the seven-year rule

Giving money away during your lifetime is one of the most common ways people try to reduce inheritance tax, and it is also where mistakes pile up. The headline rule is the seven-year rule: most gifts you make are only fully outside your estate if you survive for seven years after making them. Die within that window and the gift can be pulled back into the estate calculation.

If death occurs between three and seven years after a large gift, a sliding scale called taper relief can reduce the tax on that gift, so the longer you survive, the less is charged. Taper relief reduces the tax on the gift, not the value of the gift itself, which is a distinction people regularly muddle. Some gifts sit outside this entirely, including small annual gifting allowances, regular gifts out of surplus income, and gifts between spouses or civil partners. Because the exact gifting allowances and the taper percentages are set figures that can change, check the live amounts on gov.uk rather than relying on a number you half-remember from a few years ago.

Ways to reduce an inheritance tax bill

There are legitimate, well-established ways to bring an IHT bill down. None of these is advice for your specific situation, but they are the levers estate planners reach for most often:

• Use the spouse exemption. Leaving assets to a husband, wife or civil partner is normally IHT-free and preserves bands for transfer.
• Leave the home to direct descendants. This unlocks the residence nil-rate band, which is wasted if the property passes to anyone other than children or grandchildren.
• Gift early and keep records. Surviving seven years removes most gifts from the estate. Date every gift and note which exemption it used, because executors must evidence them.
• Give to charity. A large enough charitable legacy can trigger the reduced rate of inheritance tax on the rest of the estate.
• Review pensions separately. Pensions often fall outside the simple estate sum, so a pension calculator can help you see what is held in a pension versus what sits in the taxable estate.

Estate planning is genuinely one of the areas where professional advice pays for itself, because the rules around trusts, business relief and gifting are detailed and the figures move. Use the calculator to get oriented, then take real advice before acting.

Common mistakes and what to watch

The errors below show up again and again when families work through an estate without help.

• Forgetting the residence band only applies to a qualifying home. If the property is left to a sibling, a friend or into certain trusts rather than to direct descendants, the residence nil-rate band can be lost, and the bill jumps.
• Assuming all gifts are safe. A gift made within seven years of death is not automatically outside the estate. Large recent gifts can swallow the nil-rate band before the rest of the estate even gets a look in.
• Mixing up inheritance tax and capital gains tax. They are separate taxes. IHT is charged on the estate at death; capital gains tax can apply when an inherited asset is later sold for more than its value at the date of death. If beneficiaries sell inherited shares or a second property, they may need our capital gains tax calculator, and they each have a separate CGT annual exempt amount of £3,000 for 2026/27.
• Overlooking the spouse who died first. Unused allowances from a late husband or wife can often be claimed, but the executor has to make the claim. Skip it and the estate may overpay.
• Treating an online estimate as the filing figure. Valuations of property and possessions, business assets and trust interests all need proper assessment. The calculator gives a guide, not the number that goes on the IHT return.

2026/27 figures and the official source

Inheritance tax bands, the taper threshold for the residence allowance, the rate of tax and the gifting allowances are all set by the government and can be revised at Budgets. Because those exact figures sit outside the scope of this guide, we have deliberately not quoted band amounts here that could go out of date. For the confirmed 2026/27 nil-rate band, residence nil-rate band, the standard rate, the reduced charity rate and the gifting exemptions, use the official figures published on gov.uk's inheritance tax section and the linked pages on thresholds, gifts and rates. Always check the live numbers before you rely on any estimate.

This inheritance tax calculator and guide give estimates for general guidance only and are not personal tax, legal or financial advice. For your own estate, speak to a qualified solicitor or tax adviser.

Who should use this calculator

This estimates Inheritance Tax on an estate, which is the calculation most families put off until it is urgent. The structure is worth understanding early: there is a nil-rate band of £325,000, an additional residence nil-rate band of £175,000 where a home passes to direct descendants, and 40% is charged on whatever exceeds them.

The single most valuable feature of the rules is transferability between spouses. Anything left to a spouse or civil partner is exempt, and their unused nil-rate bands pass to the survivor — which is why a married couple can often pass on up to £1 million between them before any tax is due.

What this calculator assumes

• The estate is assets less debts and funeral expenses.
• The nil-rate band is £325,000 and the residence nil-rate band £175,000 where a qualifying home passes to children or grandchildren.
• Tax is charged at 40% on the excess.
• Transfers between spouses and civil partners are exempt, and unused bands transfer to the survivor.
• Gifts made within seven years of death may be brought back into the estate.

Limitations — what it does not cover

• Taper relief on gifts made between three and seven years before death, which reduces the tax rather than the gift.
• Business Property Relief and Agricultural Property Relief, which can remove qualifying assets from the estate substantially or entirely.
• The residence nil-rate band taper on estates above £2 million.
• Trusts, and the periodic and exit charges that apply to them.
• The reduced 36% rate where at least 10% of the net estate is left to charity.
• Gifts with reservation of benefit — giving away a house while continuing to live in it does not remove it from the estate.

Related calculators

Inheritance planning rarely sits on its own. If you are sorting out an estate or thinking ahead, these tools help with the pieces around it:

• Capital Gains Tax Calculator for what beneficiaries might owe when they sell an inherited asset.
• Pension Calculator to see what is held in a pension and how it fits alongside the taxable estate.

The numbers: the allowances that decide everything

From April 2027 unused pensions join the estate: check the pension IHT 2027 calculator. Official guidance: GOV.UK inheritance tax.

Related guides

Handling an estate after both parents have died? Read how inheritance tax works when the second parent dies.