UK Inheritance Tax Calculator
40% IHT applies above the nil-rate band. Most estates that include a main home passed to direct descendants get an extra £175k allowance.
Updated May 2026, using HMRC 2026/27 rates and current ONS / gov.uk figures.
UK IHT (2026/27):
- Nil-Rate Band (NRB): £325,000 per individual.
- Residence Nil-Rate Band (RNRB): up to £175,000 if the main home passes to direct descendants.
- Spouses can transfer unused allowances — up to £1m for a surviving spouse with full RNRB.
- Rate above the allowance: 40% (or 36% if 10% of the estate goes to charity).
How it works. Estate − (£325k + £175k RNRB if applicable) × 40%. Spousal transfer not modelled here.
Worked examples
£500,000 estate, no main home: IHT £70,000 (40% on £175k above NRB).
£600,000 estate including main home to children: IHT £40,000 (£325k NRB + £175k RNRB = £500k allowance).
£1m estate, married couple with home: usually £0 IHT (transferable allowances stack to £1m).
Sources:
HMRC Inheritance Tax
· retrieved 2026-05-12.
Frequently asked questions
Who pays IHT?
The estate, before assets are distributed. The executors arrange payment from the estate funds; HMRC must be paid before grant of probate is issued.
Can I avoid IHT with gifts?
Gifts made more than 7 years before death are usually IHT-free. Gifts within 3 years are at full 40%; tapered relief reduces the rate for years 3-7. There are also exemptions: £3,000/year, gifts to spouses, regular gifts from income.
How does the residence nil-rate band work?
It applies if your main home is left to direct descendants (children, grandchildren). It tapers above £2m of estate value (£1 lost per £2 over £2m). Many homes get the full £175k extra allowance.
Should I plan for IHT?
If your estate is approaching £325k (or £500k with the residence allowance), it's worth speaking to a qualified accountant or tax adviser or solicitor. Many families with modest homes in London/SE England have estates over the threshold.