About this tool
Why use this tool
Inheritance Tax is charged on what a person leaves when they die, and on gifts they made in the 7 years before. Whether an estate pays anything depends on a handful of thresholds, on who inherits the home, on a late spouse's unused allowances and on the dates of past gifts. This calculator puts those rules together for a date of death you choose, so you can see the tax an estate would face and how gifts and their dates change it. It is a planning tool: for a death that has happened, HMRC's forms and tools apply.
How it works
Tax is 40% on the part of the estate above the £325,000 nil-rate band (Inheritance Tax Act 1984 Sch. 1). A further £175,000 residence nil-rate band applies when a home, or a share of it, passes to children, grandchildren or other direct descendants; it is capped at the value of that home and reduced by £1 for every £2 of estate above £2 million (s.8D, s.8E). Both bands and the £2 million threshold are frozen until 5 April 2031 (Finance Act 2026 s.72). Anything left to a spouse, civil partner or charity is exempt, and a late spouse's unused bands can be added as a percentage, up to double (s.8A, s.8G). Gifts made in the 7 years before death use the nil-rate band first, in date order. Above it, taper relief reduces the tax on a gift made 3 to 7 years before death to 80%, 60%, 40% or 20% of the rate (s.7(4)), and a gift is exempt from its 7th anniversary (s.3A(4)).
Real example
A single person leaves an estate of £800,000, including a £400,000 home to their children. The residence nil-rate band of £175,000 and the nil-rate band of £325,000 cover £500,000, so £300,000 is taxed at 40%: £120,000. Had they been widowed, with both of their late spouse's bands unused, the bands would double to £350,000 and £650,000 and no tax would be due. And a gift of £400,000 made four and a half years before death, after that year's £3,000 annual exemption and the previous year's unused £3,000 (no gift that year), uses the whole nil-rate band: the £69,000 above it is taxed at 40% × 60%, £16,560 paid by the recipient, and the estate has no nil-rate band left.
Practical tips
Keep a record of every gift, its value, date and recipient: whoever deals with the estate will need them. The £3,000 annual exemption can be carried forward one year only (s.19); gifts of up to £250 per person per tax year are exempt if no other allowance is used on that person (s.20); wedding gifts are exempt up to £5,000 from a parent (s.22). Leaving the home to direct descendants rather than to nephews or nieces changes the residence nil-rate band. Inheritance Tax is due by the end of the sixth month after the death (gov.uk).
Disclaimer
This is an estimate from the figures you enter, under the rules in force on 26 September 2026; it is not tax advice. It applies across the whole UK. It does not calculate trusts, gifts you keep benefiting from, regular gifts out of income, business and agricultural property relief, pensions (part of the estate for deaths from 6 April 2027), the 36% rate for charitable estates, assets abroad or people who are not long-term UK residents.