Inheritance Tax Calculator UK 2026–27
Estimate how much Inheritance Tax (IHT) would be due on an estate in 2026–27. Enter the estate value, property, and charitable gifts to see IHT at 40% after the Nil Rate Band (£325,000) and Residence Nil Rate Band (£175,000).
Thresholds correct for 2026–27 · Reviewed by the Richard Ross · Last updated April 2026
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).
Worked example: £750,000 estate
Single person, home left to children (2026–27):
- Estate value: £750,000 (includes home worth £400,000)
- Nil Rate Band: £325,000
- Residence Nil Rate Band: £175,000
- Total threshold: £500,000
- Taxable estate: £750,000 – £500,000 = £250,000
- IHT at 40%: £100,000
If the deceased was married and their spouse died first with unused NRB/RNRB, the threshold could be £1,000,000 — reducing IHT to zero. Capital gains on assets are not relevant at death as the base cost resets — see our CGT calculator for lifetime disposals.
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.
Reliefs and exemptions
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.
RNRB taper for large estates
The Residence Nil Rate Band tapers away for estates over £2,000,000 — reduced by £1 for every £2 above that level, disappearing entirely at £2,350,000. This taper means very high-value estates lose the RNRB entirely, reverting to the £325,000 NRB only (or £650,000 for couples).
Payment and deadlines
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. The estate may also need to file a Self Assessment return for the deceased's final tax year, covering income tax on earnings and investments up to the date of death.
Sources: HMRC — Inheritance Tax (gov.uk), HMRC — IHT thresholds and rates (gov.uk)
Further reading
From 6 April 2027, unused DC pension pots will be included in your estate for inheritance tax. The combined IHT and income tax burden on inherited pensions could exceed 60% for higher-rate taxpayers.
Pension pots and inheritance tax from 2027: what to do now →Further reading
The nil-rate band, residence nil-rate band, taper relief, and spousal transfers all interact in ways that aren't obvious. Our step-by-step guide walks through every stage of the calculation using the 2026/27 rates.
How to calculate inheritance tax: a step-by-step guide →Frequently asked questions
What is the Inheritance Tax threshold in 2026–27?
The standard Nil Rate Band (NRB) is £325,000 in 2026–27 — 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.
How much IHT is due on an estate worth £600,000?
For a single person with no RNRB: the first £325,000 is covered by the NRB, leaving £275,000 taxable at 40% = £110,000 IHT. If the estate includes a home left to direct descendants, the RNRB adds £175,000 — giving a £500,000 threshold and just £100,000 taxable at 40% = £40,000 IHT. If the deceased was married and their spouse had died first, unused NRB and RNRB can double the thresholds.
How long has the IHT threshold been frozen?
The Nil Rate Band has been £325,000 since April 2009 — frozen for over 17 years. The RNRB of £175,000 has been frozen since April 2020. Both are now expected to remain frozen until at least April 2030. With house prices and asset values increasing over this period, significantly more estates are being pulled into IHT than when the thresholds were set.
Does my pension count for IHT?
Pension pots are generally outside your estate for IHT purposes, provided they are held in a trust and you have nominated beneficiaries. However, from April 2027, unused pension funds on death will be brought into the scope of IHT under proposed reforms announced in the October 2024 Budget. This is a significant change — check the latest HMRC guidance if you are relying on pensions for IHT planning.
What is Business Property Relief (BPR) for IHT?
BPR can reduce the taxable value of qualifying business assets by 50% or 100%. A trading business or shares in an unlisted trading company typically qualify for 100% relief. Listed shares in a trading company qualify for 50%. BPR has been subject to proposed changes from the October 2024 Budget, with a £1 million cap on 100% relief from April 2026 — check the latest position with a tax adviser.
When is IHT due and who pays it?
IHT must be paid within 6 months of the end of the month in which the person died. After this, interest accrues. IHT on property can be paid in instalments over 10 years. The estate's executors (or administrators if there is no will) are responsible for paying IHT before probate is granted. Banks may release funds directly to HMRC from the deceased's accounts to facilitate payment.
Related calculators
This calculator provides estimates only. Results are based on the 2026–27 tax year. Credibrate is not a tax adviser. For personalised advice speak to a qualified accountant.