Inheritance Tax Calculator
England & Wales — Current Rates
Estimate your inheritance tax exposure in under two minutes. Enter your estate details and see exactly how much IHT may be payable — with a full breakdown breakdown thresholds, reliefs, and what your options are.
Your estate details
Assets
Your main home and any investment properties
Savings, investments, ISAs, shares (not pensions — see note below)
Policies not written in trust form part of your estate
Liabilities & Gifts
Mortgage balance, loans, credit cards
Potentially exempt transfers (PETs) that may be subject to IHT
Your circumstances
Reliefs & Exemptions
Enter your estate details to get started
Your inheritance tax breakdown will appear here, showing your threshold, reliefs, and estimated IHT due.
Current IHT thresholds — 2025/26 (frozen until 5 April 2031)
Nil rate band (per person)
£325,000
Residence nil rate band (per person)
Up to £175,000
Maximum threshold — married couple with children
Up to £1,000,000
Standard IHT rate
40%
Reduced rate (10%+ to charity)
36%
RNRB taper threshold
£2,000,000
APR/BPR combined 100% relief cap (from April 2026)
£2,500,000
Threshold freeze until
5 April 2031
Spouse to spouse, then on to children
One of the most common estate planning situations — and one that can lead to a significant, avoidable IHT bill. When the whole estate passes to a surviving spouse, it is completely exempt from IHT. But this bunches up the estate, meaning on the second death the combined estate may face a much larger IHT liability.
Model your scenario
Estate values
Total net estate of the first to die (property + assets − debts)
Assets already owned by the surviving spouse before inheriting
Circumstances
How the bunching effect works
First death: The entire estate passes to the surviving spouse — completely exempt from IHT under the spouse exemption.
The bunching effect: The surviving spouse now holds both estates combined — a much larger pot than either held individually.
Second death: The combined estate passes to children. Both nil rate bands are available, but the larger estate means a potentially significant IHT bill.
Enter both estate values to see the second death IHT
This scenario shows how passing everything to a spouse first can create a larger IHT liability on the second death.
Understanding Inheritance Tax
Everything you need to know about IHT in 2026
The rules around inheritance tax are complex — and changing. Here is a clear, plain-English guide to how IHT works, who pays it, and how to reduce it.
The Nil Rate Band & Residence Nil Rate Band
Every person has a nil rate band (NRB) of £325,000 — the amount they can leave free of IHT. It will remain frozen until 5 April 2031. In addition, the residence nil rate band (RNRB) of up to £175,000 applies where you leave your home to direct descendants. A married couple can combine both allowances, giving a potential IHT-free estate of up to £1,000,000.
Spouse & Civil Partner Exemption
Assets passing between UK-domiciled spouses or civil partners are completely exempt from IHT, regardless of value. Crucially, any unused nil rate band and RNRB can be transferred to the surviving spouse — meaning the second estate can benefit from up to £1,000,000 of IHT-free allowances. This exemption does not apply to unmarried partners.
Lifetime Gifts & the 7-Year Rule
Gifts made more than 7 years before death are generally exempt from IHT (Potentially Exempt Transfers). Gifts within 7 years may be subject to IHT on a sliding scale (taper relief). Annual exemptions of £3,000 per year, small gifts of £250 per person, and gifts from surplus income are also available. Careful gifting is one of the most effective IHT planning tools.
Business & Agricultural Property Relief
Business Property Relief (BPR) provides 100% relief on qualifying business assets. Agricultural Property Relief (APR) provides 100% relief on qualifying farmland. From April 2026, a combined £2.5 million threshold applies to APR and BPR at 100% relief, with 50% relief on the combined value above that threshold. These reliefs are particularly important for business owners and farmers.
Charitable Giving & the 36% Rate
Leaving at least 10% of your net estate to a qualifying charity reduces the IHT rate from 40% to 36% on the taxable portion. This can result in a significant saving — and in some cases, the charity receives more while the beneficiaries pay less IHT. Charitable legacies can be structured in your will or through a deed of variation after death.
Pensions & IHT — Major Changes from April 2027
Currently, most defined contribution pension funds sit outside your estate for IHT purposes. However, from April 2027, unspent pension funds will be brought within the scope of IHT. This is a significant change for those with substantial pension pots. It is worth reviewing your pension nominations and overall estate plan now to understand the impact.
Trusts & IHT Planning
Trusts can be a powerful tool for IHT planning. Assets placed in certain trusts can be removed from your estate (subject to the 7-year rule for lifetime gifts). Discretionary trusts, life interest trusts, and bare trusts each have different IHT implications. A specialist solicitor can advise on whether a trust is appropriate for your circumstances and how to structure it correctly.
Deed of Variation
A deed of variation allows beneficiaries to redirect inherited assets within 2 years of the death, as if the deceased had made that gift themselves. This can be used to redirect assets to charity, to skip a generation, or to restructure an inheritance in a more tax-efficient way. It requires the agreement of all affected beneficiaries and must be executed correctly to be effective.
IHT is changing. Is your estate plan up to date?
Domicile replaced by residence as the basis for IHT — affects those with overseas connections.
APR and BPR combined 100% relief capped at £2.5 million — significant impact for farmers and business owners.
Unspent pension funds brought within IHT — major change for those with large pension pots.
Nil rate band and RNRB freeze ends — thresholds may be reviewed at this point.
Review your estate plan
These changes may significantly affect your IHT position. A review now could save your beneficiaries tens of thousands of pounds.
Call 01244 757 352Request a CallbackReduce your IHT exposure
Inheritance Tax Planning
IHT mitigation strategies, lifetime gifting, nil rate band planning, and trust structures.
Trusts
Trust structures that can remove assets from your estate and reduce your IHT liability.
2024 Budget IHT Changes
What the October 2024 Budget means for your estate — APR, BPR, and pension changes.
Business Owners
IHT planning for business owners — BPR, succession planning, and shareholder protection.
Farmers & Rural Landowners
Agricultural Property Relief, farm succession, and the April 2026 APR/BPR changes.
Deed of Variation
Redirect inherited assets within 2 years to reduce IHT or restructure an inheritance.
Care Fee Planning
Protecting your estate from care home costs while remaining compliant with the rules.
High Earners & Retirement
Estate planning for those approaching retirement with significant pension and investment assets.
Professional Referrers
Information for accountants and IFAs referring clients for estate planning advice.
Common Questions
Inheritance Tax FAQs
Plain-English answers to the most common questions about IHT in England and Wales.
Free Initial Consultation
Speak to an estate planning solicitor
Tell us about your estate and we will explain your IHT position and planning options — no obligation, costs clear from the outset.