What is the UK inheritance tax threshold for 2026/27?

The standard nil-rate band is £325,000 per person. A residence nil-rate band (RNRB) of up to £175,000 can apply if you leave a qualifying residence to direct descendants. Unused allowances can be transferred between spouses and civil partners, meaning a married couple may pass up to £1 million tax-free in many cases.

What rate is UK inheritance tax charged at?

Inheritance tax is charged at 40% on the portion of an estate above the available nil-rate bands. A reduced 36% rate can apply where at least 10% of the net estate is left to charity.

How do gifts affect inheritance tax?

Gifts made more than seven years before death are generally outside the estate. Gifts within three years attract the full 40% rate; between three and seven years a taper relief can reduce the tax. An annual exemption of £3,000 per donor also applies, along with smaller gift exemptions and gifts out of surplus income.

Can I get independent inheritance tax advice?

Yes. John Anthony Sykes is an FCA-regulated independent financial adviser covering Southport, Birkdale, Formby, Ainsdale, Ormskirk and the wider Merseyside and West Lancashire area. A free 20-minute introductory call is available to discuss your estate and options.

UK Inheritance Tax Calculator 2026/27

Estimate your IHT liability

All figures are an estimate only. Gifts, trusts, business property relief and other reliefs can affect the final liability - independent advice is recommended before making decisions.

Main residence value (£) Value of the home you plan to leave to direct descendants (children or grandchildren).

Other estate assets (£) Savings, investments (ISAs, GIA), second properties, vehicles, personal possessions. Exclude any BPR or APR-qualifying assets - enter those in the fields below.

Pension value (£) Most pensions are currently outside your estate. For deaths on or after 6 April 2027, most unused pension funds are brought into IHT.

Debts and funeral costs (£) Outstanding mortgage, loans, credit-card debts, estimated funeral costs.

Business Property Relief assets (£) Value of qualifying business assets, such as shares in unquoted trading companies and sole-trader business interests. From 6 April 2026, 100% relief is capped at a £2.5m combined BPR/APR allowance, with 50% relief above it. AIM shares now attract 50% relief, so enter half their value here.

Agricultural Property Relief assets (£) Value of qualifying farmland, working farmhouses or agricultural buildings attracting 100% APR.

Lifetime gifts in last 7 years (£)

Enter the net taxable amount of each gift in the appropriate band, after the £3,000 annual exemption (plus any unused allowance from the prior tax year). Gifts more than 7 years before death are outside the estate.

0–3 years40% rate

3–4 years32% rate

4–5 years24% rate

5–6 years16% rate

6–7 years8% rate

Use transferable nil-rate band (second spouse/civil partner death)

Leaving main home to children/grandchildren (RNRB applies)

Use April 2027 rules (include pension in estate)

At least 10% of net estate left to charity (36% rate)

Estimated inheritance tax

£0

This calculator is for illustration only. Business and agricultural property relief are applied at 100% on the amounts you enter, so it does not model the £2.5m combined allowance that applies from 6 April 2026, the 50% relief rate above it, or the 50% rate that now applies to AIM shares. It also does not account for trust arrangements, the downsizing addition, gifts with reservation of benefit, quick succession relief, or assets passing to a spouse or civil partner exempt from IHT. It assumes 100% of the first spouse's nil-rate band and residence nil-rate band were unused. For tailored inheritance tax advice in Southport, Birkdale, Formby, Ainsdale or the wider Merseyside and West Lancashire area, book a free 20-minute call.

Book a free 20-minute call

How UK inheritance tax works

The allowances in plain English

Nil-rate band: £325,000

Every individual has a £325,000 IHT allowance. Anything above this is potentially taxable at 40%. Unused nil-rate band transfers to a surviving spouse or civil partner, giving a combined allowance of up to £650,000. Both the nil-rate band and the residence nil-rate band are frozen until April 2031, so more estates drift into inheritance tax each year as asset values rise.

Residence nil-rate band (RNRB): up to £175,000

An additional allowance applies where you leave a qualifying residence to direct descendants. Combined with the transferable RNRB, a married couple can potentially pass up to £1 million free of IHT. The RNRB tapers away once an estate exceeds £2 million.

Pensions & April 2027

Most pension pots currently sit outside the IHT estate. Under the Finance Act 2026, most unused pension funds and death benefits come into the estate for deaths on or after 6 April 2027. If you have substantial pension wealth, this is a material change. See Pension IHT 2027 for detail.

Gifts & the seven-year rule

Gifts more than seven years before death generally fall outside the estate. Gifts within three years attract the full 40% rate; between three and seven years, taper relief can reduce the tax due. An annual exemption of £3,000, small-gift exemptions and gifts out of surplus income are also available.

Charity rate

Leaving at least 10% of the net estate to charity reduces the IHT rate on the remainder from 40% to 36%.

Where these figures come from

This calculator uses the published UK thresholds and rates below. Allowances can change at a Budget, so check the current position before acting on an estimate.

GOV.UK, Inheritance Tax - the £325,000 nil-rate band, the 40% rate, the reduced 36% charity rate and the spouse exemption.
GOV.UK, Inheritance Tax: residence nil rate band - the £175,000 allowance and the taper above £2 million.
GOV.UK, Inheritance Tax on gifts - the seven-year rule, taper relief bands and the £3,000 annual exemption.
GOV.UK, Passing on a home - how the residence allowance applies to direct descendants.
Finance Act 2026 and HMRC's technical note on inheritance tax on pensions - the April 2027 treatment of unused pension funds.

all insights & guides

Talk it through with an independent adviser

A calculator gets you an estimate - a conversation gets you a plan. The first 20 minutes is free.

Book your free 20-minute call