HMRC Inheritance Tax Calculator (Estimate)
Assumptions: UK thresholds (NRB £325,000 and RNRB £175,000), RNRB taper above £2m, and simplified HMRC logic for educational use. Always confirm with HMRC guidance or a qualified adviser.
How HMRC inheritance tax works
In the UK, inheritance tax (IHT) is normally charged at 40% on the taxable part of an estate above available allowances. The most common allowance is the nil-rate band (NRB), currently £325,000. If a main home is passed to direct descendants, the residence nil-rate band (RNRB) may also apply.
This inheritance tax calculator HMRC-style estimate helps you quickly model likely tax exposure before probate. It is not an official HMRC tool, but it mirrors the core framework many people search for when looking for an inheritance tax calculator UK.
Thresholds used in this calculator
- Nil-rate band (NRB): £325,000
- Residence nil-rate band (RNRB): £175,000 (if eligible)
- RNRB taper: reduced by £1 for every £2 your net estate exceeds £2,000,000
- Standard IHT rate: 40%
- Reduced estate rate: 36% where qualifying charitable gifts are at least 10% of the taxable baseline (simplified check)
What the calculator includes
1) Estate value and deductions
Enter the gross estate, then subtract debts and allowable costs. This gives the net estate used in the estimate.
2) Gifts made in the last 7 years
Lifetime gifts may use up your nil-rate band first. Any amount above available NRB may face tax, with taper relief affecting the gift tax rate depending on years between gift and death.
3) Home passed to children or grandchildren
If your home passes to direct descendants, the calculator applies RNRB (subject to property value and taper limits).
4) Transferable allowances
If a late spouse or civil partner did not use all their bands, a percentage can often be transferred. Enter that percentage to improve accuracy.
Example (quick scenario)
Suppose an estate is £900,000 with £25,000 of debts, a £300,000 home to children, and no prior transferable allowances. The net estate is £875,000. After NRB and eligible RNRB, only the remainder is taxed at IHT rates. Add lifetime gifts, and the result can change significantly because gifts consume NRB first.
Ways families legally reduce inheritance tax
- Use annual gift exemptions and normal expenditure out of income rules.
- Keep clear records of gifts and dates.
- Consider charitable legacies for impact and potential rate reduction.
- Review wills and trust planning regularly.
- Check whether transferable NRB/RNRB from a spouse can be claimed.
Important note
Tax law can change, and personal circumstances matter. This page is for planning and education only. For official calculations, forms, and up-to-date rules, check HMRC publications and get professional tax or legal advice.