gov uk inheritance tax calculator

How inheritance tax works in the UK

Inheritance tax is normally charged on the value of an estate above available tax-free allowances. The standard inheritance tax rate is 40%, but this can reduce to 36% if at least 10% of the chargeable estate is left to charity. Many estates pay no IHT at all because of exemptions and thresholds.

Main thresholds used by this calculator

• Nil-rate band (NRB): £325,000
• Residence nil-rate band (RNRB): up to £175,000
• RNRB taper: reduced by £1 for every £2 the net estate exceeds £2 million
• IHT rates: 40% standard, 36% reduced rate where charity conditions are met

What this gov uk inheritance tax calculator includes

This page is designed to mirror the way people often estimate IHT before speaking with a solicitor, accountant, or tax adviser. It includes key inputs that materially affect inheritance tax outcomes:

• Gross estate value and deductible liabilities
• Chargeable gifts made in the seven years before death (as an estimate input)
• Transferable allowances from a predeceased spouse or civil partner
• Residence nil-rate band and the £2 million taper rule
• Charitable legacies and reduced-rate tax estimate

Important points you should know

1) Spouse and civil partner exemption

Transfers between UK-domiciled spouses or civil partners are usually exempt from inheritance tax. That is one reason many estates do not pay tax on the first death.

2) Residence nil-rate band is conditional

The residence nil-rate band only applies where a qualifying residence is inherited by direct descendants (such as children or grandchildren). The amount cannot exceed the value of the home that qualifies.

3) Gifts can be complex

Gifts made during lifetime may be exempt, potentially exempt, or chargeable depending on timing and circumstances. This tool treats gift input as a chargeable amount for simplicity and does not apply taper relief by gift year.

Example calculation

Suppose an estate is worth £900,000 with £50,000 liabilities, leaving a net estate of £850,000. If the person leaves a qualifying home worth £200,000 to children and has no transferable allowances:

• NRB available: £325,000
• RNRB available: £175,000 (limited by residence value where relevant)
• Total threshold: £500,000
• Chargeable estate: £350,000
• Tax at 40%: £140,000 (before any charity reduction)

When to use GOV.UK directly

For formal reporting and payment deadlines, always check official guidance on GOV.UK and HMRC forms. Rules around trusts, business relief, agricultural relief, overseas assets, and domicile status can materially change liability.

Final note

This calculator gives a practical estimate, not a legal or tax determination. Use it for planning conversations, then confirm details with a qualified professional before making estate decisions.