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United Kingdom • Tax
UK Inheritance Tax Calculator — Estimate Inheritance Tax Liabilities
Estimate inheritance tax liability on an estate in the UK. Calculate the nil-rate band, residence nil-rate band, and tax owed.
How UK Inheritance Tax (IHT) is calculated:
- Nil-Rate Band (NRB): The default tax-free threshold is £325,000 per person.
- Residence Nil-Rate Band (RNRB): An additional £175,000 threshold applies if you pass a residence to children or grandchildren.
- Spouse Transfer: Married couples and civil partners can transfer any unused allowance to their surviving partner, potentially making up to £1 million tax-free.
- Taper Threshold: If the net estate exceeds £2 million, the RNRB is tapered by £1 for every £2 of excess.
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UK Inheritance Tax (IHT) Explained
Inheritance Tax is a tax on the estate (property, money, and possessions) of someone who has passed away. There is normally no tax to pay if the value of the estate is below the Nil-Rate Band threshold or if everything is left to a spouse or civil partner.
How UK Inheritance Tax is Calculated
To estimate the potential tax liability on a UK estate, complete these steps:
- Sum Estate Assets: Add the value of property, savings, investments, and personal belongings.
- Subtract Estate Liabilities: Deduct outstanding mortgages, loans, and funeral expenses.
- Apply Nil-Rate Band: Deduct the standard £325,000 tax-free allowance.
- Apply Residence Allowance: If passing a main home to direct descendants, deduct the Residence Nil-Rate Band (£175,000).
- Compute Tax: Apply the standard 40% tax rate to the remaining value above your total allowances.
Inheritance Tax Allowances & Tax Rates
| Parameter / Bracket | Rate / Amount |
|---|---|
| Standard Nil-Rate Band | £325,000 (0% Tax) |
| Residence Nil-Rate Band | £175,000 (0% Tax) |
| Standard IHT Tax Rate | 40% on amount above allowances |
| Reduced IHT Rate (with charity gift) | 36% if 10% or more of net estate is donated |
Frequently Asked Questions about UK Inheritance Tax
Yes, spouses and civil partners can transfer any unused Nil-Rate Band and Residence Nil-Rate Band to their surviving partner, effectively doubling the tax-free allowance to up to £1 million.
Gifts made to individuals are exempt from IHT if you survive for 7 years after making them. If you pass away within 7 years, the gifts are counted as part of your estate and may be taxed on a sliding scale (taper relief).