Estimate the inheritance tax on an estate from its value, debts, gifts and the allowances available. The tool shows the tax due and the effective rate, and states what it leaves out.
Results are estimates for planning. Check the figures before you make a financial or health decision.
How the Inheritance tax calculator works
The tool works in this order:
- Net estate = estate value minus debts and funeral costs.
- Reliefs and exemptions: business or farm property you enter gets 100% relief up to the allowance and 50% above it; anything left to a spouse or civil partner or to charity is exempt.
- Gifts in the last 7 years use up the nil-rate band first. Tax on the part of a gift above the band is charged at 40%, reduced by taper relief according to how long before death the gift was made.
- Nil-rate band left over, plus any unused share inherited from a late spouse, comes off the estate.
- Residence nil-rate band applies to a home left to children or grandchildren, limited to the value of the home, and reduced by £1 for every £2 the estate is over £2 million.
- The rest is taxed at 40%, or 36% if the charity gift meets the 10% test.
Simplifications: no trusts, no chargeable lifetime transfers, no downsizing relief, and gifts are treated as made on one date. Check GOV.UK before relying on a figure.
Worked example
Using the default values in the calculator above:
| Input | Value |
|---|---|
| Estate value | 650000 |
| Debts and funeral costs | 10000 |
| Value of home left to children or grandchildren | 400000 |
| Business or farm property qualifying for relief | 0 |
| Allowance for 100% relief | 2500000 |
| Left to spouse or civil partner | 0 |
| Left to charity | 0 |
| Gifts made in the last 7 years | 100000 |
| Years between the gift and death | 5 to 6 years (tax at 16%) |
| Nil-rate band | 325000 |
| Residence nil-rate band | 175000 |
| Unused nil-rate band inherited from a late spouse | 0 % |
| Unused residence nil-rate band inherited | 0 % |
Inheritance tax due: £96,000
| Estate after debts | £640,000 |
|---|---|
| Nil-rate band used by gifts | £100,000 |
| Nil-rate band left for the estate | £225,000 |
| Residence nil-rate band applied | £175,000 |
| Taxable estate | £240,000 |
| Tax rate on the estate | 40% |
Tips and common mistakes
Use values at the date of death, and remember that jointly owned assets and pensions may count differently. Enter only the value that qualifies for business or farm relief, not the whole business. If the first spouse died leaving some of their allowance unused, enter that percentage so the transfer is counted. Treat the result as an estimate to plan from, and speak to a solicitor or tax adviser for anything involving trusts, complicated gifts or family businesses.
Frequently asked questions
Who pays inheritance tax?
It is paid from the estate by the personal representatives, usually before probate is granted. Tax on gifts that became chargeable because of a death is normally paid by the person who received the gift.
Is everything left to a spouse tax-free?
Transfers to a spouse or civil partner are exempt, and their unused nil-rate bands can pass to the survivor. The rules differ if the recipient is not UK domiciled, which this tool does not model.
What is the 36% rate?
If at least 10% of the baseline estate is left to charity, the remainder is taxed at 36% instead of 40%. The test is detailed, so check GOV.UK.
Guides that help
- Inheritance tax explained: bands, gifts and how much your estate could pay
- Capital gains tax explained: rates, allowance and how to work it out
- UK income tax explained: bands, allowance and how it's worked out