Inheritance Tax Calculator UK 2026/27
Estimate IHT on an estate using the £325,000 nil-rate band, the £175,000 residence nil-rate band and the 40% / 36% rates.
Last updated: August 2026 · 2026/27 rates
Estate
Total assets minus debts and reasonable funeral costs.
Added back to the estate for IHT. Taper relief may apply between 3 and 7 years, see notes below.
Reliefs
Children, grandchildren, step-children. Unlocks £175,000 RNRB.
If your spouse died and their NRB + RNRB are unused, you can claim both, effectively £1,000,000 combined.
Reduces the IHT rate from 40% to 36% on the chargeable portion.
Inheritance Tax due
£40,000
at 40% on £100,000 taxable
Effective rate
6.7%
Calculation
Understanding Inheritance Tax
Every individual gets an inheritance tax-free allowance made up of two parts:
- Nil-rate band (NRB): £325,000. Applies to any estate, used first. Frozen since 2009 and now until April 2031.
- Residence nil-rate band (RNRB): £175,000. Only available if you pass your main home (or its sale proceeds) to direct descendants, children, grandchildren, step-children, fostered children. Frozen at this level since 2020/21, and until April 2031.
If you're widowed and your spouse didn't use their NRB or RNRB, you inherit it. A married couple can therefore pass up to £1,000,000 tax-free with a home to descendants.
Worked example: how a couple reaches £1m
Ann and Ben are married, own a £600,000 home and have £500,000 of savings and investments. Ann dies first and leaves everything to Ben. Transfers between spouses are exempt, so no IHT is due and none of Ann's allowances are used. Ben inherits 100% of both of her bands.
| Ben's own nil-rate band | £325,000 |
| Ann's transferred nil-rate band | £325,000 |
| Ben's own residence nil-rate band | £175,000 |
| Ann's transferred residence nil-rate band | £175,000 |
| Total tax-free on Ben's death | £1,000,000 |
Ben's estate is £1.1m, so £100,000 is taxable at 40% = £40,000. Note this only works because the home passes to their children: with no direct descendants the two residence bands disappear and the tax-free total drops to £650,000.
The Residence nil-rate band starts disappearing once the estate is worth more than £2,000,000, at a rate of £1 lost per £2 above the threshold:
- Estate £2.0m: full £175,000 RNRB (or £350,000 as a couple)
- Estate £2.35m: RNRB fully tapered for an individual
- Estate £2.7m: RNRB fully tapered for a couple even with spouse transfer
Worked example: a £2.2m estate
An estate of £2,200,000 is £200,000 above the £2,000,000threshold. The residence nil-rate band is cut by £1 for every £2 over, so it loses £100,000, so the entire £175,000 band is gone.
The trap: that last £200,000 of estate value costs £100,000 of allowance, which at 40% is £40,000 of extra tax, on top of the £80,000 due on the £200,000 itself. The effective marginal rate between £2m and £2.35m is 60%. This is why lifetime gifting or charitable legacies that bring an estate below £2m can be worth far more than they first appear.
This is the biggest change to IHT in a generation, and it is not in the figures above.
Until 5 April 2027, most unused defined contribution pension funds sit outside the estate. That is why the standard advice has been to spend other assets first and leave the pension untouched.
From 6 April 2027, unused pension funds and most lump sum death benefits are brought into the estate for Inheritance Tax. Personal representatives, rather than pension scheme administrators, become responsible for reporting and paying the tax. Death-in-service benefits from a registered scheme are expected to stay outside the estate, and transfers to a spouse or civil partner remain exempt.
Why it stings. If you die after age 75, beneficiaries already pay income tax at their marginal rate on what they draw. Layering 40% IHT on top of that can leave a higher-rate beneficiary with well under half of the pot.
What to review. Expression of wish forms, whether to start drawing the pension earlier rather than later, whether gifting out of surplus pension income makes sense, and whether life cover written in trust is a cheaper way to fund the eventual bill. These are genuinely individual decisions, take regulated advice.
This calculator applies 2026/27 rules and therefore does not include pension funds in the estate. Add them manually if you are planning past April 2027.
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Reviewed by
Alexandre Bernier, LLM (UK), CFP®, CIM®, PFP®. Financial planner with 18 years in banking and wealth management, holding a UK master of laws and the Canadian CFP®, CIM® and PFP® designations. Writes and reviews every calculator and article on FinanceToolz.
Last updated: August 2026. How figures are sourced, reviewed and corrected is set out in our editorial policy. This is general information, not regulated financial advice.
Sources
Every rate and threshold used by this calculator is taken from the official pages below. If a figure here disagrees with one of these, the official page is right, please tell us.