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UK Inheritance Tax Estimator (2025/26)

Understand your family's potential liability. Calculate the Residence Nil Rate Band and see how the 7-Year Rule affects your estate.

Standard Threshold£325,000
Max (Allocated)£1,000,000

Your Family Situation

Cash, Investments, Second Homes, Cars.

Value of the home you live in.

Are you leaving the home to children/grandchildren?

Total above £3k annual allowance.

Allowance Breakdown

Standard Nil Rate Band:£0
Residence Band (RNRB):£0
Total Tax-Free Cap:£0

Total Estate Value

£0

Taxable Amount

£0

Above Allowances

Estimated IHT Bill

£0

@ 40% Rate

Net Inheritance for Family

£0

UK Inheritance Tax Estimator: Will Your Family Pay?

Inheritance Tax (IHT) is levied on the estate (property, money, and possessions) of someone who has died. Often called a "voluntary tax" by financial planners, IHT liability can often be drastically reduced—or eliminated entirely—with careful planning.

For the 2025/26 tax year, the standard threshold is frozen at £325,000. Anything above this is taxed at 40%. However, complex allowances like the Residence Nil Rate Band (RNRB) mean many families pay nothing. Use our calculator above to check your position.

The Residence Nil Rate Band (RNRB) Explained

Introduced to help families pass on the family home, the RNRB provides an additional £175,000 allowance per person.

  • It only applies if you leave a residential property (that you have lived in) to direct descendants.
  • Direct descendants include children, grandchildren, step-children, adopted children, and foster children. Nieces and nephews do not count.

The Wealth "Taper Trap"

The RNRB is designed for "middle Britain", not the super-wealthy. If your total estate is worth more than £2 million, you start to lose this allowance. It is tapered away at a rate of £1 for every £2 over the £2m threshold.

The 7 Year Rule for Gifts

Giving gifts while you are alive is one of the most effective ways to reduce your estate's value. If you survive for 7 years after making a gift, it falls completely outside your estate and is tax-free.

If you die within 7 years, the gift may be taxed. This is known as a "Potentially Exempt Transfer" (PET). Taper relief applies to the tax rate (not the gift value) if you survive at least 3 years:

  • 0-3 Years: 40% tax (Full Rate)
  • 3-4 Years: 32% tax
  • 4-5 Years: 24% tax
  • 5-6 Years: 16% tax
  • 6-7 Years: 8% tax
  • 7+ Years: 0% tax (Exempt)

Married Couples & Transferable Allowances

Married couples and civil partners are treated very favourably. Firstly, assets pass between spouses tax-free on death. Secondly, any unused percentage of the Nil Rate Band and RNRB can be transferred to the surviving spouse.

This means a surviving spouse can typically use:
Own NRB (£325k) + Partner's NRB (£325k) + Own RNRB (£175k) + Partner's RNRB (£175k) = £1,000,000 Total Tax-Free Allowance.

How to Avoid Inheritance Tax Legally

  1. Gift £3,000 Annually: Everyone has an "Annual Exemption" of £3,000. You can give this away tax-free immediately, without the 7-year rule applying.
  2. Put Life Insurance in Trust: If your life insurance pays out to your estate, it adds to the IHT bill. Writing it "in trust" keeps it separate, so it pays out directly to beneficiaries tax-free.
  3. Leave 10% to Charity: If you leave at least 10% of your net estate to a qualifying charity, the IHT rate on the rest of your estate falls from 40% to 36%.