Estimate what your estate would owe HMRC for 2026/27 — built for the April 2026 APR/BPR £2.5M cap and the April 2027 pension reform. England & Wales.
✓ 2026/27 thresholds · verified against GOV.UK 17 Sept 2026
Free
§1What you own
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Savings, investments, life insurance, other property, possessions — roughly.
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§2What you owe & gave
One rough total — you can split it out below.
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£
§3Your situation
Marital status
Unused pension to include? (new April 2027 rule)
Leaving to charity0%
VALOREN
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IHT Calculation
Prepared
24 October 2026
Your inheritance tax estimate
Estimated inheritance tax
£0
Enter your figures to begin
How it's worked outFY 2026/27
Net estate value
£0
Nil-rate band
−£325,000
Taxable estate
£0
Inheritance tax due
£0
Updates live · estimate only, not advice
About inheritance tax
What is inheritance tax?
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 4.7% of UK estates actually pay IHT (HMRC Inheritance Tax liabilities statistics, published 30 July 2026: 4.72% of UK deaths in 2023-24) — 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.
Key facts 2026/27
Standard rate40% on the taxable estate
Reduced rate36% if 10%+ goes to charity
Per-person threshold£325,000 (frozen to 2031)
With home to childrenup to £500,000
Married couple combinedup to £1,000,000
Tax-free allowances
The nil-rate bands
Nil-rate band (NRB)
£325,000
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.
Residence nil-rate band (RNRB)
£175,000
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.
RNRB taper above £2M
Estate value
RNRB reduction
RNRB remaining
Combined max
Under £2,000,000
None
£175,000
£500,000 (single)
£2,100,000
£50,000
£125,000
£450,000
£2,300,000
£150,000
£25,000
£350,000
£2,350,000+
Full
£0
£325,000 only
Updated for 2026/27
What changed — and why this calculator is different
This calculator models both the April 2026 APR/BPR cap and the April 2027 pension reform — updated when each reached Royal Assent.
April 2026 — APR/BPR cap
£2.5M combined allowance
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.
April 2027 — pensions
Unused pensions in the estate
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.
02
Regular gifts from income
Recurring payments to family from earned income (not savings) are fully exempt with no cap. Potentially the most valuable and underused exemption.
03
Earlier gifts
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.
04
Charitable rate
If 10%+ of the net estate goes to a registered UK charity, the IHT rate on the remainder drops from 40% to 36%.
05
Life insurance in trust
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.
06
Professional review
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.
Note: This calculator is informational only and not regulated tax or financial advice. Estates with trusts, business interests, foreign assets or non-trivial structures should be reviewed by a qualified solicitor or Chartered Tax Adviser.
Gifting strategy
The 7-year gifting rule
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.
Taper relief — IHT rate by years survived
0–3 years
40%
3–4 years
32%
4–5 years
24%
5–6 years
16%
6–7 years
8%
7+ years
0% (exempt)
The taper only reduces the tax on the gift itself if you don’t survive the full seven years — it doesn’t track itself. Keeping the record of what was given, when, and that it was really given away is one of the things the desk prepares. It starts with a free intake, and if you do not need us, we will tell you.
Exemptions
What is completely exempt from IHT
Spouse / civil partnerUnlimited
Anything left to a UK-domiciled spouse or civil partner is fully exempt — no cap. This effectively defers IHT to the second death.
UK charitiesUnlimited + 36% rate
Gifts to registered UK charities are fully exempt. If 10%+ of the net estate goes to charity, the IHT rate on the remainder drops from 40% to 36%.
Annual gift allowance£3,000 / year
£3,000 per year gifted tax-free with no 7-year clock. Unused allowance rolls over one year. Over a decade, removes £30,000 from the estate.
Small gifts£250 per recipient
Up to £250 given to any number of people each year, completely free of IHT. Cannot be combined with the annual allowance for the same recipient.
Wedding gifts£1,000–£5,000
Up to £5,000 to a child, £2,500 to a grandchild, £1,000 to anyone else — given before the ceremony, tax-free.
Regular gifts from incomeNo limit (from income)
Recurring gifts from income (not capital) that don't affect living standards are fully exempt. One of the most powerful — and underused — IHT reliefs.
Lifetime gift modelling
What happens if you give some of it away.
Gifts above the available nil-rate band attract IHT on a sliding scale depending on how many years the giver survives. Below: enter a hypothetical gift made today, see the IHT charge at each survival horizon, and the maximum saving if the giver survives the full seven years.
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Enter your estate above, and a hypothetical gift here, to see the per-horizon modelling.
How this works. Lifetime gifts above the available nil-rate band attract IHT on a tapered scale by years of survival: 40% (0–3 years) · 32% (3–4) · 24% (4–5) · 16% (5–6) · 8% (6–7) · 0% (7+ years).
The modelling above runs the same calculation as the main result with the gift treated as already made and the giver surviving to each anniversary.
Gifts with reservation of benefit, normal expenditure out of income, the £3,000 annual exemption, and the wedding-gift exemption are not modelled here — speak to a STEP solicitor or Chartered Tax Adviser before acting on any modelled scenario.
TECHNICAL NOTE · FINANCE ACT 2026
The April 2027 Pension Reform — what executors actually face
Three structural shifts mainstream coverage routinely misreports — the technical baseline, drafted against the Finance Act 2026 text and the Registered Pension Schemes (Provision of Information) (Amendment) Regulations 2026.
PLATE I
Notional Pension Property
From 6 April 2027, unused pension funds are treated as part of the estate for IHT calculation only. They do not enter probate. Executors cannot use them to settle non-pension debts.
INCLUDED AS NPP
Unused defined contribution (DC) pots
Flexi-access drawdown (FAD) accounts
QNUPS, Section 615(3) schemes
EXPLICITLY EXEMPT
Death-in-service benefits (group + individual)
Dependant's scheme pensions
Trivial commutation lump-sum death benefits
Spousal / civil partner / charitable allocations
PLATE II
The Withholding Notice
To protect personal liability, executors can issue a Withholding Notice freezing up to 50% of the pension pot for up to 15 months from date of death. The administrative timeline mismatch is the heart of the friction.
Scheme administrators may take many months — sometimes years — to identify beneficiaries. The 6-month HMRC deadline does not move.
PLATE III
"Suffer the Burden"
The headline "67% double-tax" rate ignores statutory relief. For post-75 deaths, the Finance Act 2026 mitigation under s.226B IHTA 1984 prevents the income tax from compounding on the IHT-paid portion.
THEORETICAL HEADLINE
40% IHT + (60% × 45% income tax) = 67%
WITH s.226B PAYMENT NOTICE
IHT settled first → income tax on the net only. The 67% never crystallises.
Two routes: (i) HMRC-led Payment Notice deducts IHT at source from the PSA before release; (ii) beneficiary direct settlement with HMRC reconciliation refund. Either way, the headline 67% is theoretical.
Sources: Finance Act 2026 (Royal Assent 18 March 2026); IHTA 1984 s.226B; Registered Pension Schemes (Provision of Information) (Amendment) Regulations 2026; ITEPA 2003; FA 2004. Effective for deaths on or after 6 April 2027. Informational only — not regulated tax advice.
If your result needs professional review
Where the boundary is reached, you choose the route.
For estates approaching or exceeding the combined nil-rate band, or where business or agricultural relief, trusts, foreign assets, or gifts with reservation apply, specialist review is usually worth far more than it costs. You have two routes from here — and we are straightforward about which one is ours.
Signum is Valoren's own desk — when you instruct Signum, you are instructing us, and this page tells you so rather than dressing it up as an independent recommendation. Valoren is not a law firm and is not regulated. Neither STEP nor CIOT pays Valoren a referral fee, and we pass your details to no one without your written consent: the directories are listed so that the independent route is always one click away.
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Where this fits
The number is the easy part. Knowing where the records are is the rest.
IHT is computed from records. Bank statements, ISA balances, pension valuations, property deeds, gift letters, charity confirmations. The Estate Quiz scores how findable yours are — two minutes, no card.
01What is the inheritance tax nil-rate band in 2026?+
The standard nil-rate band is £325,000, frozen until 5 April 2031. The residence nil-rate band is £175,000 where qualifying residential property passes to direct descendants. The RNRB tapers £1 for every £2 the estate exceeds £2,000,000.
02What changed for Agricultural Property Relief and Business Property Relief in April 2026?+
From 6April 2026, a £2,500,000 allowance applies to the combined value of property qualifying for 100% Agricultural Property Relief or 100% Business Property Relief under the Finance Act 2026. The allowance is transferable between spouses and civil partners. Value above the £2.5M allowance qualifies for 50% relief only, resulting in a 20% effective IHT charge on the excess.
03How does the April 2027 pension reform affect inheritance tax?+
From 6 April 2027, most unused pension funds are included in the taxable estate at death under Finance Act 2026 provisions. The calculator's April 2027 toggle adds the entered pension value to the estate computation.
04What is the 7-year taper on lifetime gifts?+
Lifetime gifts above the available nil-rate band attract IHT at tapered rates depending on years between gift and death: 40% (0–3 years), 32% (3–4), 24% (4–5), 16% (5–6), 8% (6–7), and 0% after 7 years. The taper applies to the IHT charge, not the gifted value.
05When does the 36% reduced charity rate apply?+
Where 10% or more of the net estate (after the available nil-rate band) is left to qualifying charities, the inheritance tax rate on the chargeable estate falls from 40% to 36%.
06How is inheritance tax calculated? (worked example)+
Inheritance tax is charged at 40% on the value of the estate above the available allowances. Worked example: a single person leaves a £500,000 estate with no residence going to children. Subtract the £325,000 nil-rate band, leaving £175,000 chargeable.
40% of £175,000 is £70,000 of inheritance tax, so the family keeps £430,000. If a home worth at least £175,000 passed to children, the £175,000 residence nil-rate band would also apply and the tax would fall to £0.
07How much can a married couple leave before inheritance tax?+
Up to £1,000,000. Each spouse or civil partner has a £325,000 nil-rate band plus, where a home passes to direct descendants, a £175,000 residence nil-rate band. Unused allowances transfer to the survivor, so a couple can pass up to £650,000 plus £350,000 of residence allowance — £1,000,000 in total — before any inheritance tax is due.
08Are pensions subject to inheritance tax?+
Most unused pension funds are outside the estate for inheritance tax until 5 April 2027. From 6April 2027, under the Finance Act 2026, most unused pension funds are brought into the taxable estate at death. Use the calculator's April 2027 toggle to see the difference for your estate.
09When do you not need to report an estate for inheritance tax?+
Many estates qualify as 'excepted estates' and do not need a full IHT400 account — broadly where no tax is due because the estate is within the available allowances, or everything passes to a surviving spouse, civil partner or charity. The personal representatives confirm the position when applying for probate. Larger or more complex estates, or any estate with tax to pay, must file the full account.
HMRC Inheritance Tax Statistics (latest published, GOV.UK) — source for "roughly 4.7% of UK estates" figure and annual receipts trend data.
Disclaimer
This calculator is informational. It states the legal facts behind each input and produces the arithmetic outcome. It is not regulated tax or financial advice.
Estates with trusts, business or agricultural relief, foreign assets, gifts with reservation, or any non-trivial structure should be reviewed by a qualified solicitor or chartered tax adviser. Where the boundary is reached, the matter moves to Signum's qualified specialists — bespoke advice from the people licensed to give it.
Last verified 17 Sept 2026 · Next review 30 Nov 2026 · Sourced and verified by Standard Index Group · ORCID 0009-0000-9170-8589
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