UK Inheritance Tax Calculator 2026

Understanding the UK Inheritance Tax Calculator

Inheritance Tax (IHT) is a tax on the estate of someone who has died, including all their property, money, and possessions. It can also be payable on some gifts made during a person’s lifetime. For many in the UK, understanding and planning for Inheritance Tax is a critical part of financial planning, ensuring that your loved ones receive as much of your legacy as possible.

This calculator helps you estimate the potential Inheritance Tax liability on an estate in the UK for the 2026 tax year. By inputting details about the estate’s value, gifts made, and specific exemptions, you can gain a clear understanding of the tax implications and explore ways to mitigate the tax burden.

How Inheritance Tax is Calculated

The calculation of Inheritance Tax involves several steps, primarily determining the net value of the estate, applying available exemptions and reliefs, and then calculating tax on the remaining taxable portion.

Here’s a simplified breakdown of the process:

1. Determine the Gross Estate Value: This is the total value of all assets, including property, savings, investments, and possessions, before any deductions.
2. Subtract Debts and Exemptions: Debts (like mortgages) are deducted. Certain gifts made during a lifetime and gifts to qualifying charities are also exempt.
3. Apply the Nil-Rate Band (NRB): This is the threshold below which no Inheritance Tax is usually paid. For 2026, the standard Nil-Rate Band is £325,000.
4. Apply the Residence Nil-Rate Band (RNRB): An additional threshold applies if a home is passed to direct descendants. For 2026, the maximum RNRB is £175,000.
5. Transfer Unused Bands: If you are a surviving spouse or civil partner, any unused NRB or RNRB from your deceased partner can be transferred to you, potentially doubling your available bands.
6. Calculate the Taxable Estate: This is the portion of the estate that exceeds the total available Nil-Rate Bands.
7. Apply the Tax Rate: Inheritance Tax is generally charged at 40% on the taxable portion of the estate. However, if at least 10% of the net estate is left to charity, the rate on the taxable portion is reduced to 36%.

Formula Overview:

• Net Estate for IHT = (Total Estate Value - Gifts to Charity - Debts)
• Total Available Nil-Rate Band = (Standard Nil-Rate Band + Residence Nil-Rate Band + Transferred Unused NRB + Transferred Unused RNRB)
• Taxable Estate = MAX(0, Net Estate for IHT - Total Available Nil-Rate Band)
• Inheritance Tax Due = Taxable Estate * (40% or 36% if charity exemption applies)

Key Variables and Parameters

To accurately estimate your Inheritance Tax, the calculator considers the following inputs:

• Total value of your estate: The combined worth of all your assets (property, savings, investments, possessions) after deducting any debts.
• Value of gifts made in the last 7 years: Gifts made within 7 years of death may be subject to IHT, depending on their value and when they were made (known as Potentially Exempt Transfers or PETs).
• Value of gifts to charity (in will): Gifts left to qualifying charities in your will are exempt from Inheritance Tax and can reduce the overall tax rate if they exceed 10% of the net estate.
• Value of home passed to direct descendants: The value of your main home if it is left to your children, grandchildren, or other direct lineal descendants. This may qualify for the Residence Nil-Rate Band.
• Marital Status: Your marital status affects the transferability of unused Nil-Rate Bands from a deceased spouse or civil partner.
• Unused Nil-Rate Band from deceased spouse/partner (%): If applicable, the percentage of the standard Nil-Rate Band that was unused by a deceased spouse or civil partner and can be transferred to your estate.
• Unused Residence Nil-Rate Band from deceased spouse/partner (%): If applicable, the percentage of the Residence Nil-Rate Band that was unused by a deceased spouse or civil partner and can be transferred to your estate.

Example Scenarios

Let’s look at a few common scenarios to illustrate how Inheritance Tax is calculated using the 2026 rates.

Scenario	Total Estate Value	Gifts Made (7 yrs)	Gifts to Charity	Home Value (to Descendants)	Marital Status	Unused NRB (%)	Unused RNRB (%)	Total NRB Available	Taxable Estate	IHT Due	Effective Rate
1. Standard - Single, above NRB	£750,000	£0	£0	£300,000	single	0%	0%	£500,000	£250,000	£100,000	0.133%
2. Married - Full RNRB, below NRB	£1,200,000	£0	£0	£600,000	married	100%	100%	£500,000	£250,000	£100,000	0.133%
3. Charity Donation - Reducing Tax	£900,000	£0	£90,000	£400,000	single	0%	0%	£500,000	£250,000	£100,000	0.133%

Official Sources and References

The rules and rates for Inheritance Tax are set by the UK government and administered by HM Revenue & Customs (HMRC). It is crucial to refer to official guidance for the most accurate and up-to-date information.

• HM Revenue & Customs (HMRC) - Inheritance Tax: https://www.gov.uk/inheritance-tax
• HM Revenue & Customs (HMRC) - Nil-rate band: https://www.gov.uk/inheritance-tax/nil-rate-band
• HM Revenue & Customs (HMRC) - Residence nil-rate band: https://www.gov.uk/inheritance-tax/residence-nil-rate-band

Last Verified: November 02, 2026

Important Tips and Considerations

• Early Planning is Key: Inheritance Tax planning should ideally begin well in advance. Understanding your potential liability allows you to explore options like making gifts, setting up trusts, or taking out life insurance.
• Gifts and the 7-Year Rule: Gifts made more than 7 years before death are generally exempt from IHT. Gifts made within 7 years may be taxed on a sliding scale (taper relief), but this only applies if the gift is above the Nil-Rate Band.
• Annual Exemptions: You can give away up to £3,000 each tax year without it being added to the value of your estate for IHT purposes. There are also exemptions for small gifts, wedding gifts, and gifts out of normal expenditure.
• Charitable Donations: Leaving at least 10% of your net estate to charity can reduce the Inheritance Tax rate on the remainder of your taxable estate from 40% to 36%.
• Business and Agricultural Relief: Certain business assets and agricultural property may qualify for IHT relief, potentially reducing their value for tax purposes by 50% or 100%.
• Professional Advice: Inheritance Tax rules can be complex. For tailored advice specific to your circumstances, it is highly recommended to consult with a qualified financial advisor or tax specialist. They can help you navigate the intricacies of estate planning and ensure compliance with current regulations.