UK Inheritance Tax Calculator

Inheritance tax (IHT) is charged on the estate of someone who has died — their property, money and possessions. The standard rate is 40% on the value above the available tax-free thresholds.

Roughly 4% of UK estates actually pay IHT (HMRC IHT statistics, latest published) — but with property values rising and thresholds frozen since 2009, that proportion grows each year through "fiscal drag."

IHT is due within 6 months of the month of death — usually before probate is granted, which creates a timing challenge for executors.

Available to everyone. Frozen since 2009 until April 2031.

When a spouse dies leaving everything to their partner, their unused NRB transfers — potentially doubling it to £650,000 for the survivor.

Applies when your main home passes to direct descendants (children, grandchildren, step-children). Transfers on death. Tapers £1 for every £2 the estate exceeds £2M — disappearing at £2.35M.

Finance Act 2026 introduced a £2,500,000 combined allowance for Agricultural Property Relief and Business Property Relief. Assets within this threshold remain fully exempt (100%). Value above £2.5M receives 50% relief — an effective 20% IHT charge on the excess.

The allowance transfers between spouses — so a couple can shelter up to £5M combined. This calculator uses the Finance Act 2026 enacted figure — £2.5M combined allowance, not the original £1M Budget 2024 proposal, which was raised to £2.5M on 23 December 2025 before Royal Assent.

From 6 April 2027, most unused defined-contribution pension pots will be included in the taxable estate under Finance Act 2026 (s.78). Pensions were previously outside IHT entirely — this is a fundamental change for anyone with significant DC pension savings.

Use the pension question above to model your current position and the April 2027 position side by side. This calculator models both positions in one view — before and after 6 April 2027.

£3,000 per year falls outside the estate with no 7-year clock. Unused allowance rolls over one year. Over 10 years, £30,000 is removed from the estate — tax-free.

Recurring payments to family from earned income (not savings) are fully exempt with no cap. Potentially the most valuable and underused exemption.

Larger gifts start the 7-year clock from the date they are made. The earlier in life a gift is made, the more likely it is to fall fully outside the estate.

If 10%+ of the net estate goes to a registered UK charity, the IHT rate on the remainder drops from 40% to 36%.

A policy written in trust pays beneficiaries directly, outside the estate — avoiding IHT on the payout and providing immediate cash to meet the tax bill.

For estates over £1M, or those with business/agricultural assets, trusts or offshore interests, specialist review — from Signum or an independent STEP/CTA adviser — is usually worth the cost.

Gifts made during your lifetime leave your estate for IHT purposes — but only if you survive 7 years after making them. If you die within 7 years, the gift is drawn back in and may face tax, reduced by "taper relief."

Important: gifts with reservation — such as giving your house away but continuing to live in it rent-free — never leave your estate, regardless of how many years pass.