Inheritance Tax Calculator

Inheritance Tax (IHT) is the tax paid on the estate of someone who has died. It is charged at 40% on the part of the estate that sits above the tax-free thresholds. With those thresholds frozen until 2030 and property values still elevated, more estates than ever now fall into IHT.

Anything left to a spouse or civil partner is normally exempt, as are gifts to UK-registered charities. The remaining wealth is what the nil-rate bands and IHT calculation apply to.

• Nil-rate band: £325,000 — the standard tax-free allowance per person, frozen until April 2030.
• Residence Nil-Rate Band: £175,000 — an additional allowance when the main home is left to direct descendants (children, grandchildren, step-children or adopted children).
• Combined for a couple: up to £1 million — a married couple or civil partners can leave up to £1m to direct descendants completely tax-free, by stacking each nil-rate band and each residence band.
• £2,000,000 taper threshold — the RNRB is reduced by £1 for every £2 the estate exceeds £2 million, and disappears entirely above around £2.35m for a single person or £2.7m for a couple.

The standard IHT rate is 40% on the value above the tax-free thresholds. A reduced rate of 36% applies when at least 10% of the net estate (the "baseline amount") is left to a UK-registered charity.

On lifetime gifts that fall back into the estate within seven years, taper relief reduces the effective tax depending on how long ago the gift was made. The calculation has nuances that a calculator alone can't cover — our tax planning service runs the seven-year history of gifts before producing a final liability.