How much Inheritance Tax would your estate pay?
Free UK IHT calculator covering the £325,000 Nil Rate Band, £175,000 Residence Nil Rate Band, RNRB taper above £2M, the 40% main rate, spouse transfers and the 7-year gift rule. Built by chartered accountants.
Your estate position
Enter total values, before any allowances. Spouse status decides whether you have £500K or £1M of allowances.
Estimated Inheritance Tax
Your estate is worth £900,000 with £500,000 of allowances available, leaving £400,000 chargeable at 40%. There is significant scope to reduce this through lifetime planning, trusts, Business Relief investments and charitable strategy.
How your estate is taxed
| Item | Amount |
|---|---|
| Total estate value | £900,000 |
| Less: outstanding debts | £0 |
| Less: spouse exemption | £0 |
| Less: charitable bequest | £0 |
| Net estate | £900,000 |
| Less: Nil Rate Band | -£325,000 |
| Less: Residence Nil Rate Band | -£175,000 |
| Chargeable estate | £400,000 |
| IHT rate applied | 40% |
| IHT due | £160,000 |
£140,000 of IHT is avoidable with planning
A Tax Planning Workshop with our chartered team produces a written estate strategy covering lifetime gifts, trusts, Business Relief, pension structuring and charitable timing. Most clients save 5x to 10x the £1,200 fee.
UK Inheritance Tax 2025/26 reference
Allowances frozen until April 2030. Rates and thresholds shown apply to deaths in the 2025/26 tax year.
Allowances and rates
| Item | Value |
|---|---|
| Nil Rate Band (per person) | £325,000 |
| Residence Nil Rate Band | £175,000 |
| Couple combined maximum | £1,000,000 |
| RNRB taper threshold | £2,000,000 |
| RNRB fully tapered (single) | £2,350,000 |
| RNRB fully tapered (couple) | £2,700,000 |
| Main IHT rate | 40% |
| Reduced rate (10%+ to charity) | 36% |
| Spouse exemption | 100% |
Gift exemptions and 7-year taper
| Type | Limit |
|---|---|
| Annual exemption | £3,000 |
| Small gifts (per recipient) | £250 |
| Wedding gift to child | £5,000 |
| Wedding gift to grandchild | £2,500 |
| Wedding gift other | £1,000 |
| Gift survives 0-3 years | 40% |
| Gift survives 3-4 years | 32% |
| Gift survives 4-5 years | 24% |
| Gift survives 5-6 years | 16% |
| Gift survives 6-7 years | 8% |
| Gift survives 7+ years | 0% |
Frequently asked questions
Each person has a Nil Rate Band of £325,000. If your main residence passes to direct descendants (children, grandchildren, stepchildren) you get an additional Residence Nil Rate Band of £175,000, taking the per-person total to £500,000. Married couples and civil partners can transfer unused allowances, so combined they can pass on up to £1,000,000 free of Inheritance Tax. Both allowances are frozen until April 2030.
Gifts you make during your lifetime fall outside your estate for IHT purposes if you survive 7 years from the date of the gift. Gifts made within 3 years of death are taxed at the full 40% rate. Gifts made 3 to 7 years before death qualify for taper relief: 32% if 3-4 years, 24% if 4-5 years, 16% if 5-6 years, 8% if 6-7 years. Important: taper relief only applies if the gift itself was big enough to exceed the £325,000 Nil Rate Band on its own, otherwise the full 40% applies but the gift uses up the NRB first.
The £175,000 Residence Nil Rate Band tapers away at £1 for every £2 the estate value exceeds £2,000,000. A single estate worth £2,350,000 or more loses the RNRB entirely. A couple's combined £350,000 RNRB tapers between £2,000,000 and £2,700,000. This taper catches a lot of London homeowners by surprise, especially after recent property price rises. Tax Planning Workshop covers strategies to bring estate values below the £2M threshold so families do not lose the RNRB.
No. Transfers to a UK-domiciled spouse or civil partner are 100% exempt from Inheritance Tax. There is no limit on what you can pass between spouses tax-free. Any unused Nil Rate Band and Residence Nil Rate Band also transfer to the surviving spouse, which is why a married couple can pass on up to £1,000,000 between them. When the second spouse dies, the executor claims the transferred allowances by submitting form IHT402 alongside the IHT400.
Annual exemption: £3,000 per tax year (you can carry forward 1 year of unused allowance, so up to £6,000 in year one). Small gifts: up to £250 per person per year, unlimited recipients. Wedding gifts: £5,000 to a child, £2,500 to a grandchild or great-grandchild, £1,000 to anyone else. Gifts to charity, political parties, and your spouse: unlimited and exempt. Regular gifts from surplus income: unlimited if they are habitual, paid from income (not capital) and do not reduce your standard of living. Combining these properly can shift £20,000+ per year out of an estate.
The main strategies are: lifetime gifting (7-year clock), trusts (discretionary, bare, interest in possession), Business Relief investments (100% relief after 2 years on qualifying shares like AIM stocks and trading companies), pension contributions (pensions sit outside the estate), life assurance written in trust (pays the IHT bill without inflating the estate), charitable giving (drops rate from 40% to 36% if 10% to charity), and spouse transfers. The right combination depends on your asset mix, family structure, and time horizon. We model this in the £1,200 Tax Planning Workshop with a written estate strategy.
Inheritance Tax is the most planned-around tax in the UK. Most of it is avoidable.
Book a free 15 minute call with Kris, our Senior Chartered Accountant, to discuss whether a Tax Planning Workshop is right for your estate. The £1,200 fee is dwarfed by the savings most clients secure within their first year of planning.
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