Inheritance Tax Calculator UK 2025–26
Estimate how much Inheritance Tax (IHT) would be due on an estate in 2025–26. Includes the Nil Rate Band, Residence Nil Rate Band, and the reduced 36% rate for charitable gifts.
How Inheritance Tax works in the UK
Inheritance Tax (IHT) is charged at 40% on the value of an estate above the available nil rate bands. The standard Nil Rate Band (NRB) is £325,000 — a figure that has been frozen since 2009 and is now set to remain frozen until at least 2030. With property prices having increased substantially over that period, a growing number of estates now face an IHT liability.
The Residence Nil Rate Band (RNRB) was introduced in April 2017 to reduce IHT on family homes. It allows an additional £175,000 of the estate to pass free of IHT when a residential property is left to direct descendants (children, grandchildren, step-children, or adopted children). Together, the NRB and RNRB give a single person a potential £500,000 threshold, and a married couple or civil partners a combined £1,000,000 (assuming all allowances are available).
IHT is calculated on the net estate — the value of all assets minus liabilities. Assets include property, savings, investments, business interests, and personal possessions. Liabilities include mortgages, loans, and the reasonable costs of the funeral. Joint assets passing by survivorship (such as a jointly held property) are typically included at their 50% share.
Several reliefs can reduce an IHT bill beyond the nil rate bands. Business Property Relief (BPR) and Agricultural Property Relief (APR) can provide 50% or 100% relief on qualifying assets. Annual gifting exemptions allow £3,000 per year to be given away tax-free, along with unlimited gifts from surplus income. The 7-year rule means outright gifts made more than 7 years before death fall entirely outside the estate.
Charitable giving is also highly tax-efficient for IHT purposes. Any gift to a UK registered charity is exempt from IHT. Furthermore, if at least 10% of the net estate is left to charity, the IHT rate on the remaining taxable estate drops from 40% to 36%. In some circumstances, this means the charity receives more while the net cost to the estate is similar or even less.
IHT is normally paid by the estate's executors before probate is granted, within 6 months of the end of the month in which the person died. Interest accrues after this point. Property can be paid in instalments over 10 years in some circumstances — useful where the estate is illiquid.
Frequently asked questions
What is the Inheritance Tax threshold in 2025–26?
The standard Nil Rate Band (NRB) is £325,000 in 2025–26 — unchanged since 2009. The Residence Nil Rate Band (RNRB) of £175,000 applies on top when a home is left to direct descendants, giving a combined threshold of £500,000 for a single person leaving their home to children. Married couples and civil partners can combine unused allowances, giving a potential total of £1,000,000.
Do I need to pay IHT if I leave everything to my spouse?
No. Transfers between spouses and civil partners are entirely exempt from IHT, regardless of amount. Any unused NRB and RNRB from the first spouse to die can be transferred to the survivor, potentially doubling the available allowances on the second death. This calculator does not model spousal transfers — speak to a solicitor for advice on estate planning.
What is the Residence Nil Rate Band (RNRB)?
The RNRB is an additional £175,000 tax-free allowance that applies when a residential property (or the proceeds from a property sold after 8 July 2015) is left to direct descendants — children, grandchildren, or step-children. The RNRB tapers away for estates over £2,000,000 at £1 for every £2 over the threshold, and disappears entirely for estates above £2,350,000.
How does the 7-year rule work for gifts?
Gifts made more than 7 years before death are generally outside of the estate and fully exempt from IHT. Gifts made within 7 years are potentially exempt transfers (PETs) and may be included in the taxable estate. Taper relief reduces the IHT on gifts made between 3 and 7 years before death — from 80% reduction at 3 years, down to 20% at 6-7 years. Gifts in the final 3 years before death are taxed in full.
Can I reduce IHT by leaving money to charity?
Yes, in two ways. First, any amount left directly to a UK registered charity is fully exempt from IHT. Second, if you leave at least 10% of your net estate (the estate after deducting the NRB) to charity, the IHT rate on the remainder reduces from 40% to 36%. This 4-point reduction can sometimes mean the charity receives more and the estate still benefits — your solicitor can advise on the maths for your specific estate.
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This calculator provides estimates only. Results are based on the 2025–26 tax year. Credibrate is not a tax adviser. For personalised advice speak to a qualified accountant.