Inheritance Tax Calculator 2026/27
Estimate the inheritance tax (IHT) due on an estate for the 2026/27 tax year. Enter the estate details below to calculate the tax liability, including nil-rate band, residence nil-rate band, and spouse exemption.
Estate Details
Assets passed to a spouse or civil partner are exempt from IHT
Qualifies for the residence nil-rate band (additional £175,000)
If a spouse has died without using their nil-rate band, it can be transferred to the surviving partner
How to use
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About This Calculator
This Inheritance Tax (IHT) Calculator helps you estimate the inheritance tax that may be due on an estate for the 2026/27 tax year. It takes into account the nil-rate band, residence nil-rate band, spouse exemption, transferable allowances, and the RNRB taper for larger estates.
IHT applies to estates valued above the tax-free threshold and is charged at 40% on the excess. Use this tool to understand how these allowances interact and plan accordingly.
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How to Use the Calculator
Enter the Total Estate Value
Enter the total value of the estate, including property, savings, investments, and personal possessions.
Enter the Property Value
Enter the value of the main residence within the estate. This is needed to calculate the residence nil-rate band, which applies when the home is passed to direct descendants.
Enter Liabilities and Gifts
Enter any debts or liabilities that should be deducted from the estate (e.g. mortgage, funeral costs, outstanding bills). Also enter the total value of any gifts made in the last 7 years, as these may affect the IHT calculation.
Set Exemptions and Allowances
Toggle the spouse exemption if the estate is being left to a surviving spouse or civil partner. Toggle the direct descendants option if the home is being left to children or grandchildren. Select whether one or two nil-rate bands are available (two if a deceased spouse's unused allowance transfers).
Calculate and View Results
Click "Calculate" to see the full breakdown, including:
- Net estate: Estate value after deducting liabilities
- Tax-free threshold: Combined NRB and RNRB
- Inheritance tax due: Tax at 40% on the amount above the threshold
- Estate after tax: The amount passed to beneficiaries
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Understanding Inheritance Tax
Inheritance Tax (IHT) is a tax on the estate of someone who has died. The estate includes all property, money, investments, and possessions. IHT is charged at 40% on the value of the estate that exceeds the available tax-free thresholds.
Not every estate pays IHT. In 2026/27, each person has a nil-rate band of £325,000, and potentially an additional residence nil-rate band of £175,000. Combined with the spouse exemption and transferable allowances, many estates fall below the threshold.
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Nil-Rate Band (NRB) — £325,000
The nil-rate band is the main tax-free threshold for IHT. For 2026/27, it is set at £325,000 per person. Any estate valued at or below this amount will not be subject to inheritance tax.
The NRB has been frozen at £325,000 since 2009 and is expected to remain at this level until at least April 2030.
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Residence Nil-Rate Band (RNRB) — £175,000
The residence nil-rate band is an additional £175,000 allowance that applies when a main residence is passed to direct descendants (children, grandchildren, step-children, adopted children, or foster children).
The RNRB was introduced in April 2017 and gives a combined threshold of up to £500,000 per person (£325,000 NRB + £175,000 RNRB). For a married couple or civil partners, this can reach up to £1,000,000.
The RNRB only applies if the estate includes a qualifying residential property and it is left to qualifying beneficiaries. The RNRB cannot exceed the value of the property itself.
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Spouse / Civil Partner Exemption
Assets passed to a surviving spouse or civil partner are completely exempt from inheritance tax, regardless of the value. This means the entire estate can be transferred to the surviving partner without any IHT liability.
This is one of the most significant IHT reliefs. It effectively defers the tax until the second partner dies, at which point the estate of the surviving partner (including any inherited assets) will be assessed for IHT.
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Transferable Nil-Rate Band
When a spouse or civil partner dies and does not use all of their nil-rate band (for example, because their estate was left entirely to the surviving partner under the spouse exemption), the unused portion can be transferred to the surviving partner's estate.
This means a surviving spouse can potentially have a combined tax-free threshold of:
- NRB: £325,000 x 2 = £650,000
- RNRB: £175,000 x 2 = £ 350,000 (if leaving home to direct descendants)
- Total: Up to £1,000,000 tax-free
Select "2" nil-rate bands in the calculator if the deceased spouse's unused allowance is being transferred.
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RNRB Taper (£2m+ Estates)
For estates with a net value exceeding £2,000,000, the residence nil-rate band is tapered. The RNRB is reduced by £1 for every £2 that the net estate exceeds £2 million.
For a single person with a £175,000 RNRB, the allowance is fully tapered away once the estate reaches £2,350,000. For a couple with a combined £350,000 RNRB, it disappears entirely at £2,700,000.
| Net Estate Value | RNRB (Single) | RNRB (Couple) |
|---|---|---|
| £2,000,000 or less | £175,000 | £350,000 |
| £2,100,000 | £125,000 | £300,000 |
| £2,200,000 | £75,000 | £250,000 |
| £2,350,000 | £0 | £175,000 |
| £2,700,000 | £0 | £0 |
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Gifts and the 7-Year Rule
Gifts made within 7 years of death may be subject to inheritance tax. If the total value of gifts made in the 7 years before death exceeds the available nil-rate band, IHT may be charged on the excess.
However, "taper relief" can reduce the amount of tax payable on gifts, depending on when they were made:
| Years Before Death | Tax Rate on Gift |
|---|---|
| 0 – 3 years | 40% |
| 3 – 4 years | 32% |
| 4 – 5 years | 24% |
| 5 – 6 years | 16% |
| 6 – 7 years | 8% |
| More than 7 years | 0% (exempt) |
Note: This calculator uses a simplified gifts calculation. For detailed taper relief calculations, consult a financial adviser.
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Upcoming Changes
Business Property Relief (BPR) & Agricultural Property Relief (APR) — From April 2026
From April 2026, the 100% IHT relief on business and agricultural property will be capped at the first £1 million of combined qualifying assets. Relief above this amount will be reduced to 50%, meaning the effective IHT rate on excess business and agricultural property will be 20%.
This change will particularly affect family farms and small business owners with assets exceeding £1 million. AIM-listed shares qualifying for BPR will receive 50% relief from the first pound.
Pensions — From April 2027
From April 2027, unused pension pots and death benefits will be included within the scope of inheritance tax for the first time. Currently, pensions can be passed on free of IHT, making them an effective estate planning tool. This change will bring most defined contribution pension funds into the taxable estate, significantly affecting estates that rely on pensions as a means of passing wealth to the next generation.
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Disclaimer
This calculator provides estimates only based on the 2026/27 tax year rules. It uses a simplified calculation and does not account for all possible reliefs, exemptions, and specific circumstances.
- Gifts: Taper relief on gifts is not fully modelled; the calculator uses a simplified approach.
- Charitable donations: Leaving 10% or more to charity can reduce the IHT rate to 36%, which is not modelled here.
- Business/agricultural relief: BPR and APR are not included in this calculator.
- Trusts: Assets held in trusts may be treated differently for IHT purposes.
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