Inheritance Tax Calculator
Estimate potential inheritance tax liability on an estate.
What is the Inheritance Tax Calculator?
An Inheritance Tax (IHT) calculator estimates the tax due on an estate after someone dies, based on the estate's total value and the tax-free allowances ("nil-rate bands") that apply. It works by adding the standard nil-rate band to the residence nil-rate band (an extra allowance that applies when a main home passes to direct descendants, which tapers away for very large estates), subtracting the combined allowance from the estate value, and taxing the remainder at the standard 40% rate. To check it by hand, add up the applicable nil-rate bands, subtract from the total estate value, and multiply what's left by 40% — this simplified version excludes reliefs like spousal transfer, gifting rules and business/agricultural relief, which can significantly change the real figure.
How it works
Inheritance Tax (IHT) is charged at a standard rate on the value of an estate above the available tax-free allowances. Every estate gets a standard nil-rate band, and an additional residence nil-rate band is available on top of that if a main home is left to direct descendants (children or grandchildren) — though this additional band tapers away for very large estates.
UK context
IHT has numerous reliefs and exemptions beyond the basic nil-rate bands — transfers between spouses or civil partners are normally exempt entirely, gifts made more than seven years before death generally fall outside the estate, and there are specific reliefs for business and agricultural assets. Because of these many special cases, a simple calculator can only give a rough illustrative figure, not the actual liability for a real estate.
Tips
- Any unused nil-rate band (and residence nil-rate band) can normally be transferred to a surviving spouse or civil partner, potentially doubling the allowance available on the second death — a commonly overlooked planning point.
- Gifts made during your lifetime can reduce the eventual IHT bill, but rules around timing (the "seven-year rule") and gift size are detailed — get proper advice if lifetime gifting is part of your planning.
- IHT is normally the responsibility of the estate (paid before assets are distributed to beneficiaries), not something beneficiaries pay directly out of their own funds.
Frequently asked questions
What is the Inheritance Tax rate?
The standard rate is charged on the portion of an estate above the available tax-free allowances (the nil-rate band, plus the residence nil-rate band if applicable) — check gov.uk for the current standard rate and thresholds.
Do I get extra allowance if I leave my home to my children?
Yes — an additional residence nil-rate band is available on top of the standard nil-rate band if your main home is left to direct descendants, though it tapers away and eventually disappears for very large estates.
Is inheritance tax due on everything left to a spouse?
Generally no — transfers between spouses or civil partners are normally exempt from IHT entirely, and any of the deceased's unused nil-rate band can normally be transferred to the surviving partner for use later.
How accurate is a simple IHT calculator?
Only roughly — IHT has many reliefs, exemptions and special cases (gifts, trusts, business/agricultural relief) that a simple calculator can't fully capture. For actual estate planning, professional advice is strongly recommended.
A quick note
This is a simplified, illustrative estimate. IHT has many reliefs and exemptions not included here (spousal transfer, lifetime gifts, business/agricultural relief). Seek professional advice for actual estate planning.