UK Inheritance Tax Calculator 2026/27
Work out UK Inheritance Tax for 2026/27: the £325,000 nil-rate band, the £175,000 residence nil-rate band and its taper above £2 million, a late spouse's transferred allowances, the 36% charity rate and the gift needed to reach it, gifts within 7 years with taper relief, the new £2.5 million farm and business relief allowance, and unused pensions from April 2027.
How it works
Net estate = estate − debts (+ unused pensions from 6 April 2027) · chargeable = net − spouse − charity − farm/business relief (100% up to £2.5m, 50% above) · nil-rate band £325,000 (+ late spouse's unused %), used first by gifts in the last 7 years · residence band = min(£175,000 (+ transferred %) − (net − £2m) ÷ 2, home to descendants) · tax = 40% × (chargeable − nil-rate band left − residence band), or 36% if charity ≥ 10% of (chargeable − nil-rate band + charity) · tax on gifts above the band: 40%, or 32/24/16/8% if made 3–7 years before death
Inheritance Tax is charged on what someone leaves above their tax-free allowances. Everyone has a nil-rate band of £325,000. Leaving a home (or a share of one) to children or grandchildren adds the residence nil-rate band of up to £175,000. Both bands are frozen until April 2031. Anything left to a spouse or civil partner, or to charity, is exempt, and whatever share of the bands the first spouse did not use passes to the survivor, so a married couple can usually leave up to £1 million free of tax. The residence band shrinks for large estates: its maximum (including any transferred band) falls by £1 for every £2 the estate is worth above £2 million, measured after debts but before exemptions and reliefs, and the result is then capped at the value of the home. Gifts made in the 7 years before death are added back first and use up the nil-rate band before the estate does. If they exceed it, the recipients pay tax on the excess, reduced by taper relief when the gift was made 3 to 7 years before death (32%, 24%, 16% or 8% instead of 40%). The rest of the estate is taxed at 40%, or 36% if at least 10% of the baseline amount is left to charity. The baseline is the chargeable estate after the nil-rate band, with the charity gift added back, and the calculator shows the gift that would reach the 10% test. Two newer rules are included. From 6 April 2026 agricultural and business property relief is 100% only on the first £2.5 million of qualifying property (transferable between spouses) and 50% above that. From 6 April 2027 most unused pension funds and death benefits count as part of the estate, which can also push it over the £2 million taper.
Worked example
With the defaults: a £900,000 estate with £50,000 of debts, a £450,000 home left to the children, nothing to a spouse or charity and no gifts. Net estate = £900,000 − £50,000 = £850,000. The nil-rate band of £325,000 is all available. The residence band is £175,000 (the home is worth more and the estate is under £2 million). Taxable = £850,000 − £325,000 − £175,000 = £350,000, and tax = 40% × £350,000 = £140,000, an effective rate of 16.5%. With a late spouse's unused bands transferred (100%), the allowances double to £1,000,000 and the bill is £0. The 36% test needs 10% of £850,000 − £325,000 = £52,500 left to charity: with that gift the taxable estate is £297,500 and the tax £107,100 at 36%.
Sources: GOV.UK: Inheritance Tax (thresholds, 40% and 36% rates) · GOV.UK: Inheritance Tax residence nil-rate band (taper, transfer and worked examples) · HMRC Inheritance Tax Manual IHTM46026: default and adjusted allowance (taper) · HMRC Inheritance Tax Manual IHTM45010 and IHTM45011: calculating the baseline amount for the 36% rate · GOV.UK: Inheritance Tax on gifts and taper relief · RBC Brewin Dolphin: Inheritance tax is changing (pensions from April 2027, £2.5m APR/BPR allowance, freeze to 2031)
Frequently asked questions
What is the Inheritance Tax threshold for 2026/27?
The nil-rate band is £325,000 and the residence nil-rate band is up to £175,000, so up to £500,000 per person when a home goes to children or grandchildren, and up to £1 million for a married couple. Both are frozen until 5 April 2031.
How does the £2 million taper work?
The maximum residence nil-rate band is reduced by £1 for every £2 the estate is worth over £2 million (after debts, before exemptions and reliefs). A single person's £175,000 is gone at £2.35 million; a couple's combined £350,000 is gone at £2.7 million.
How does the 36% charity rate work?
If at least 10% of the baseline amount is left to charity, the rest of the estate is taxed at 36% instead of 40%. The baseline is the estate after exemptions, reliefs and the nil-rate band, with the charity gift added back. HMRC's example: a £750,000 estate leaving £50,000 to charity has a baseline of £425,000, so £50,000 passes the 10% test and the tax is 36% of £375,000 = £135,000.
Are pensions subject to Inheritance Tax?
From 6 April 2027 most unused pension funds and pension death benefits are included in the estate. Death-in-service benefits, dependants' scheme pensions and anything paid to a spouse or civil partner stay exempt. Before that date, most pensions sit outside the estate.
How are gifts taxed if I die within 7 years?
Gifts above the annual exemptions are added back and use your £325,000 nil-rate band first. Tax is only due on gifts above the band, at 40% if made less than 3 years before death, falling to 32%, 24%, 16% and 8% for gifts made 3 to 7 years before. The recipient pays that tax; the estate loses the nil-rate band the gifts used.
What changed for farms and businesses in April 2026?
From 6 April 2026 agricultural and business property relief is 100% on the first £2.5 million of combined qualifying property and 50% above that, an effective 20% tax rate on the excess. A spouse's unused allowance can transfer, so a couple can pass up to £5 million with full relief. AIM shares now get 50% relief.
When does Inheritance Tax have to be paid?
By the end of the sixth month after the death, after which HMRC charges interest. Tax on property, land and qualifying farm or business assets can be paid in 10 equal yearly instalments.
Related calculators
Uses the 2026/27 Inheritance Tax rules for England, Wales, Scotland and Northern Ireland: £325,000 nil-rate band and £175,000 residence nil-rate band (both frozen to April 2031), the £2 million taper, 40% and 36% rates, the £2.5 million 100% agricultural and business relief allowance from 6 April 2026, and unused pensions counted from 6 April 2027. It is a simplified estimate, not tax or legal advice: trusts, gifts with reservation, foreign assets, downsizing relief, quick succession relief and non-UK domiciled spouses are not modelled. Check GOV.UK or ask a solicitor or tax adviser before acting.