How to use this calculator
The result updates as you type.
- Total value of the estate: everything the person owns at death, including their home or share of it, savings, investments and possessions.
- Debts and funeral costs: mortgages, loans, unpaid bills and reasonable funeral costs. These come off first.
- Gifts in the last 7 years: gifts that count for Inheritance Tax after exemptions such as the annual exemption. They use up the nil-rate band first.
- Leaving a home to children or grandchildren: tick this to apply the residence nil-rate band, then enter the value of the home (or share) less any mortgage on it.
- Marital status: if married, enter the amount left to the spouse or civil partner, which is exempt. If widowed, enter the share of each band your late spouse didn’t use.
- Share left to charity: the percentage of the estate (after debts) going to charity. Charity gifts are exempt and can bring the rate down to 36%.
Example: a £750,000 estate with a home
Say an estate is worth £750,000, with £15,000 of debts and funeral costs. The home, worth £350,000, goes to the children. The person was single.
| Amount | |
|---|---|
| Estate after debts | £735,000 |
| Nil-rate band | − £325,000 |
| Residence nil-rate band | − £175,000 |
| Taxable amount | £235,000 |
| Inheritance Tax at 40% | £94,000 |
Now change one thing at a time:
- Widowed, with both bands unused by the late spouse: the tax-free bands double to £1 million, and no Inheritance Tax is due.
- 10% to charity (£73,500): that’s more than 10% of the £410,000 baseline amount, so the rate falls to 36% and the tax drops to £58,140. The charity receives £73,500, but the family receives only £37,640 less than before, because the tax falls by £35,860.
- 5% to charity (£36,750): below the 10% test, so the 40% rate stays and the tax is £79,300.
For larger estates, the taper matters. With a £2.3 million estate (after £15,000 of debts) and a £900,000 home, the residence band falls by £142,500 to £32,500, and the tax is £771,000.
How it’s calculated
Tax = (estate − exemptions − nil-rate band available − residence band used) × rate
- Net estate = total value − debts and funeral costs.
- Exemptions: anything left to a spouse, civil partner or charity.
- Nil-rate band available = £325,000, plus any transferred share from a late spouse, minus gifts in the last 7 years.
- Residence nil-rate band = £175,000 (plus any transferred share) if a home goes to direct descendants, reduced by £1 for every £2 the net estate is over £2 million, and limited to the home’s value.
- Rate = 40%, or 36% if charity gifts are at least 10% of the baseline amount. Following HMRC’s method, the baseline amount is the estate after exemptions minus the nil-rate band, with the charity gifts added back.
The calculator doesn’t cover tax on the gifts themselves, taper relief on gifts, Business Relief, Agricultural Relief or the downsizing addition.
Tips for planning Inheritance Tax
- Make or update your will. It decides who receives what, and whether the spouse and residence bands are used fully.
- Keep records of gifts. Executors need to know about gifts made in the 7 years before death.
- Think about the home. The residence nil-rate band only applies when a home goes to direct descendants, including step-children and adopted children.
- Check the charity test before writing a legacy. Leaving 10% of the baseline amount can cost your family much less than it gives to charity, as the example shows.
- Get professional advice for complex estates. Trusts, business assets and farms have rules this calculator doesn’t cover.
Frequently asked questions
What is the Inheritance Tax threshold in 2026/27?
The nil-rate band is £325,000. If you leave a home to your children or grandchildren, the residence nil-rate band adds up to £175,000, so the threshold can reach £500,000. Both bands are fixed at these levels until 5 April 2031.
Do I pay Inheritance Tax if I leave everything to my spouse?
There's normally no Inheritance Tax on anything you leave to a spouse or civil partner. Any unused nil-rate band, and unused residence nil-rate band, can then be added to theirs when they die.
How much can a married couple pass on tax-free?
Up to £1 million when both bands are unused at the first death and the home goes to direct descendants: two nil-rate bands of £325,000 and two residence nil-rate bands of £175,000.
How does the residence nil-rate band taper work?
For estates worth more than £2 million, the residence nil-rate band falls by £1 for every £2 over £2 million. The value used for the taper is the estate's assets minus debts, before exemptions and reliefs.
How does the 36% charity rate work?
If at least 10% of the baseline amount goes to charity, the rest of the estate is taxed at 36% instead of 40%. The baseline amount is the estate after exemptions and the nil-rate band, with the charity gifts added back.
What happens to gifts made in the last 7 years?
Gifts made in the 7 years before death count against the nil-rate band first, leaving less for the estate. If they're worth more than the nil-rate band, tax may be due on the gifts themselves, which this calculator doesn't cover.