Inheritance Tax Calculator 2026/27
Inheritance tax is 40% on estates above the £325,000 nil rate band. Add the £175,000 Residence Nil Rate Band when leaving your home to children or grandchildren and a couple can pass on up to £1,000,000 free of IHT. Gifts, debts and charity donations affect the bill. Enter your estate value below.
Figures verified against HMRC Income Tax rates on .
Written by James HartleyCIMA
Calculator
Total value of all assets: property, savings, investments, personal possessions, business interests.
Mortgages, loans, credit cards, funeral costs. Deducted before IHT is calculated.
Gifts above annual exemptions made in the 7 years before death are added to the estate for IHT purposes.
Reliefs & Exemptions
Stay updated
Get UK Finance Tips Weekly
Tax changes, HMRC rate updates, and money-saving guides. No spam - unsubscribe any time.
How Inheritance Tax Calculator 2026/27 Works
IHT is calculated on your net estate (assets minus debts) plus any chargeable gifts made in the 7 years before death. We deduct your available nil rate band(s) and apply 40% to the remainder.
Nil Rate Band (NRB)
Every individual has an NRB of £325,000 (frozen until April 2031). Married couples can combine these, so if the first spouse dies without using their NRB (by leaving everything to the survivor), the full £650,000 is available on the second death.
Residence Nil Rate Band (RNRB)
An additional £175,000 RNRB applies if you leave your main home (or the proceeds) to direct descendants. This tapers above a £2m estate, withdrawing completely at £2.35m. Couples can combine RNRB allowances for up to £350,000.
Business Relief and Agricultural Relief, 2026/27 Changes
From 6 April 2026, the rules for Business Relief and Agricultural Relief change significantly. The amount of qualifying property eligible for 100% relief is now capped at £2,500,000 per individual. Assets above this cap receive 50% relief. Any unused portion of the 100% allowance can be transferred to a surviving spouse or civil partner. AIM shares are now limited to 50% Business Relief only. These changes could significantly affect estate planning for business owners and farmers.
Frequently Asked Questions
The nil rate band (NRB) is £325,000 per person. Married couples and civil partners can combine allowances, giving a potential £650,000 threshold. If you leave your home to direct descendants, an additional Residence Nil Rate Band (RNRB) of £175,000 applies (£350,000 for couples), potentially raising the threshold to £1,000,000.
The standard IHT rate is 40% on the value of your estate above the threshold. The rate reduces to 36% if you leave at least 10% of your 'net estate' to qualifying charities. The effective rate is always lower once you factor in the nil rate band exemptions.
Each year you can give away £3,000 without IHT (annual exemption). You can also give any number of gifts of up to £250 per person per year. Gifts to spouses and civil partners are fully exempt. Larger gifts are 'Potentially Exempt Transfers' (PETs). They become fully exempt if you survive 7 years. Gifts made in the 7 years before death may be added back into your estate using a taper.
Yes. Assets passed to a UK-domiciled spouse or civil partner are completely exempt from IHT regardless of value. Any unused nil rate band (NRB and RNRB) from the first spouse's death can be transferred to the surviving spouse and used on their death.
From April 2026, 100% Business Relief and Agricultural Relief are combined and capped at £2,500,000 per person. Qualifying assets above this threshold receive 50% relief rather than 100%. Any unused portion of the 100% allowance is transferable to a surviving spouse.
From April 2026, AIM shares only qualify for 50% Business Relief, down from the previous 100%. This means AIM shares held for over 2 years will still receive some relief but will no longer be fully exempt from IHT.
Was this calculator helpful?
Official Rates Used
This calculator uses official HMRC rates for 2026/27. View the current rates at GOV.UK:
Rates last verified:
Disclaimer: This calculator provides estimates based on standard HMRC rates for 2026/27. Results may vary based on individual circumstances. This is not financial advice. Always consult a qualified accountant or CIMA-qualified financial adviser for personal tax matters.