How the inheritance tax calculator works
Inheritance tax (IHT) is paid on the estate of someone who has died: their property, money and possessions, minus debts and funeral costs. Most estates pay nothing, because the first £325,000 is tax-free and a home left to children or grandchildren can raise that to £500,000. Anything above the threshold is taxed at 40%. This calculator uses the thresholds for deaths in the 2026/27 tax year, 6 April 2026 to 5 April 2027.
Inheritance tax = taxable estate × 40% (or 36% if 10% goes to charity)
Inheritance tax thresholds for 2026/27
| Allowance | Single person | Married couple or civil partners |
|---|---|---|
| Nil-rate band | £325,000 | £650,000 |
| Residence nil-rate band | £175,000 | £350,000 |
| Total if a home goes to children | £500,000 | £1,000,000 |
| Residence band taper starts | Estates over £2 million | |
These thresholds are frozen at the same level until at least April 2030. The nil-rate band has been £325,000 since 2009.
The residence nil-rate band and the taper
The extra £175,000 only applies if a home the person lived in is left to direct descendants: children, stepchildren, adopted or foster children, and grandchildren. It's capped at the value of the home, so a £120,000 flat only gives £120,000 of residence band. If the estate is worth more than £2 million, the residence band is reduced by £1 for every £2 over, so a single person loses it entirely at £2.35 million.
Passing allowances to a spouse
Anything left to a husband, wife or civil partner is free of IHT. If the first partner to die didn't use all their nil-rate band, the unused percentage is added to the survivor's. The same applies to the residence band, even if the first death was before it existed in 2017. That's why a widowed parent can usually leave up to £1 million tax-free. Enter the transferred percentages under "Widowed or a surviving civil partner?".
The 36% rate for leaving 10% to charity
Gifts to charity are exempt. And if at least 10% of the "baseline amount" goes to charity, the rest of the taxable estate is charged at 36% instead of 40%. The baseline is roughly the estate after the nil-rate band (but before the residence band) and other exemptions. The calculator tells you how much you'd need to leave to qualify.
Worked examples
Single parent leaving a £1 million estate
The estate includes a £400,000 home left to the children. Tax-free threshold: £325,000 + £175,000 = £500,000. Taxable estate: £500,000. Inheritance tax at 40%: £200,000.
The same estate with £70,000 to charity
The baseline is £1,000,000 − £325,000 = £675,000, and 10% of that is £67,500. A £70,000 gift qualifies, so the taxable estate of £430,000 is charged at 36%: £154,800. The children receive £775,200, only £24,800 less than without the gift.
A widow with full transferred allowances
With 100% of both bands transferred from her late husband, the threshold is £1 million, so the same £1 million estate pays nothing.
A £2.2 million estate
The residence band is cut by (£2,200,000 − £2,000,000) ÷ 2 = £100,000, leaving £75,000. Tax: (£2,200,000 − £325,000 − £75,000) × 40% = £720,000.
Changes to know about
- Farms and businesses: from 6 April 2026, 100% agricultural and business property relief is limited to the first £2.5 million of qualifying assets, with 50% relief above that. This calculator doesn't include those reliefs.
- Pensions: for deaths from 6 April 2027, most unused pension funds and death benefits will count as part of the estate. Deaths in 2026/27 before then are not affected.
Tips to reduce inheritance tax
- Gifts you make are free of IHT if you live for seven years afterwards, and you can give away £3,000 a year with no wait at all.
- Regular gifts out of surplus income are exempt straight away if they don't affect your standard of living.
- Make a will that leaves your home to children or grandchildren to secure the residence band.
- If the estate is near £2 million, lifetime gifts can bring it under the taper threshold.
Selling assets before death can trigger capital gains tax, and the pension calculator shows how a pension pot could grow. Buying a home for the next generation? Check the stamp duty calculator.
Frequently asked questions
How much can you inherit without paying inheritance tax in 2026/27?
Up to £325,000 for a single person, or £500,000 if a home is left to children or grandchildren. A married couple or civil partners can pass on up to £1 million between them.
What is the inheritance tax rate?
Inheritance tax is charged at 40% on the part of an estate above the tax-free threshold, or 36% if at least 10% of the baseline amount is left to charity.
Do you pay inheritance tax when your husband or wife dies?
No. Everything left to a spouse or civil partner is exempt, and their unused nil-rate band and residence nil-rate band pass to the survivor to use on their own death.
What is the residence nil-rate band taper?
If an estate is worth over £2 million, the £175,000 residence nil-rate band is reduced by £1 for every £2 above £2 million. A single person's allowance is gone completely at £2.35 million, or £2.7 million with a transferred band.
Is inheritance tax going up in 2026/27?
No. The £325,000 nil-rate band, £175,000 residence nil-rate band and £2 million taper threshold are frozen for 2026/27 and the following years. The rate stays at 40%.
Last reviewed October 2026 using 2026/27 figures. This calculator gives an estimate for guidance only.