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Estate planning · 2026/27 rules

Inheritance Tax Calculator 2026/27

See the inheritance tax on an estate for a death today, and how the bill changes when most unused pensions join the estate on 6 April 2027.

Your estate
£
£
£
Enter 0 if no home goes to direct descendants. Step, adopted and foster children count.
Pensions · counted from 6 April 2027
£
Leave out death-in-service benefits and dependants' scheme pensions: they stay outside the estate.
Allowances, gifts and legacies
£
£
£
Inheritance Tax on a death today
£36,000
Effective rate 6.1% · pensions outside the estate
Death on or after 6 April 2027 · pensions included
£116,000
£80,000 more than today, because £200,000 of pension joins the estate.
BreakdownTodayFrom 6 Apr 2027
Estate after debts£590,000£790,000
of which pensions£0£200,000
Residence nil-rate band used−£175,000−£175,000
Nil-rate band used (after gifts)−£325,000−£325,000
Taxable estate£90,000£290,000
Rate40%40%
Inheritance Tax£36,000£116,000
Left to beneficiaries£554,000£674,000
Effective rate6.1%14.7%

Estimate only, not financial or legal advice. Uses the 2026/27 rules and doesn't model business or agricultural property relief, the downsizing addition, trusts, quick succession relief or foreign assets.

How inheritance tax works in 2026/27

Inheritance tax is charged on the estate of someone who has died: their property, money and possessions, less debts such as a mortgage and the funeral costs. Every estate has a nil-rate band of £325,000. Nothing is due on the value below it, and the standard rate of 40% is charged only on the part above it. There is normally no inheritance tax to pay if the estate is worth less than £325,000, or if everything above that goes to a spouse, civil partner, charity or community amateur sports club.

GOV.UK uses a simple example: an estate worth £500,000 with no home passing to children is £175,000 over the threshold, so the tax is 40% of £175,000, or £70,000. Enter £500,000 as the estate and 0 for the home in the calculator above and you get the same answer.

The tax is paid from the estate by the person dealing with it (the executor, if there's a will), and beneficiaries don't normally pay tax on what they inherit. The main things that change the bill are who inherits the home, whether a late husband, wife or civil partner left allowances unused, lifetime gifts, legacies to charity and, from April 2027, the money left in pensions. Each has its own section below, and each is an input in the calculator.

The residence nil-rate band and the £2m taper

On top of the nil-rate band, an estate can have a residence nil-rate band of up to £175,000 when a home the person owned and lived in at some point goes to their direct descendants: children, grandchildren and other lineal descendants, including step-children, adopted and foster children, and the spouses or civil partners of any of them. Nephews, nieces and siblings don't count. That is how a single person's threshold can increase to £500,000.

Two limits apply. First, the band can't be more than the value of the home, or the share of it, that the descendants inherit, after any mortgage: leave your children a flat worth £120,000 and the band is £120,000, not £175,000. Second, it tapers away on large estates, falling by £1 for every £2 the estate is worth over £2,000,000. For the taper, the estate is valued as all its assets less its debts, before exemptions such as the spouse exemption and before reliefs such as business or agricultural property relief. A single person's band has gone completely at £2,350,000; a widowed person with a full transferred band keeps some of it until £2,700,000.

Inside the taper, each extra £1 of estate is taxed at 40p and also removes 50p of residence band, which costs another 20p: an effective marginal rate of 60%. A single person leaving a £500,000 home to their children pays £600,000 on a £2,000,000 estate and £660,000 on £2,100,000, so £60,000 more tax on £100,000 more estate. Our residence nil-rate band guide covers who qualifies, what counts as a home and how the band transfers.

Passing allowances between spouses: the £1m couple

Anything left to a husband, wife or civil partner is exempt. And if you're married or in a civil partnership, whatever part of the nil-rate band the first estate doesn't use is added to the survivor's threshold when they die. The residence nil-rate band works the same way. What passes is the unused percentage of each band rather than a cash sum, and the survivor's estate can add at most one extra band of each: 100% on top of its own.

Put together, two nil-rate bands (£650,000) and two residence bands (£350,000) let a couple pass on up to £1,000,000 without inheritance tax, provided the survivor leaves a home worth at least £350,000 to direct descendants and the estate is no more than £2,000,000. The calculator gives £0 on a £1,000,000 estate with both late-partner bands at 100%; the same estate without them pays £200,000.

If your husband, wife or civil partner died before 6 April 2017, when the residence band didn't yet exist, their residence band counts as 100% unused. The calculator's widowed option asks what percentage of each band your late partner didn't use; if they left everything to you, both are usually 100%. Partners who weren't married or in a civil partnership get neither the exemption nor the transfer, however long they lived together.

Gifts and the 7-year rule

No inheritance tax is due on a gift if you live for 7 years after making it, unless the gift is part of a trust. Gifts made in the 7 years before death count against the nil-rate band before the estate does, which is why the calculator asks for them. A single person with a £700,000 estate who leaves a £350,000 home to their children pays £80,000. Had they also given away £200,000 in the previous 7 years, the gifts would take that much of the nil-rate band, leaving £125,000 for the estate, and the bill would be £160,000.

Once gifts in the 7 years before death add up to more than £325,000, the people who received them may have to pay inheritance tax on their gifts. Taper relief then reduces the tax on gifts made 3 to 7 years before death. It only applies when the gifts made in those 7 years total more than £325,000.

Gift made before deathTax rate on the gift
Less than 3 years40%
3 to 4 years32%
4 to 5 years24%
5 to 6 years16%
6 to 7 years8%
7 years or more0%

Some gifts are exempt straight away and never count towards the threshold:

Enter only chargeable gifts in the calculator, meaning the total after these exemptions. One trap to know about: giving your home away but carrying on living in it is a "gift with reservation", which still counts as part of your estate unless you pay the new owner rent at the going rate.

Leaving 10% to charity: the 36% rate

Legacies to charity are exempt, and if at least 10% of the estate's baseline amount goes to charity, the rate on the rest of the taxable estate falls from 40% to 36%. The baseline is the estate after debts, less exempt legacies such as those to a spouse, less whatever nil-rate band is left after lifetime gifts. The residence nil-rate band is not taken off, and neither is the charity legacy itself.

Take a single person with a £1,000,000 estate and a £400,000 home going to their children. The baseline is £675,000 (the estate less the £325,000 nil-rate band), so the test is met by leaving £67,500 to charity. The tax falls from £200,000 to £155,700. The charity receives £67,500, but the family's share falls by only £23,200, from £800,000 to £776,800. Leave £67,499 instead and the rate stays at 40%: the tax is £173,000 and the family gets £759,501.

The calculator applies the test and shows which rate it used. Because the baseline depends on what the estate is worth at death, a fixed cash legacy that passes the test today may not pass it if the estate grows.

Pensions and inheritance tax from 6 April 2027

Most unused pension pots currently sit outside the estate for inheritance tax. For deaths on or after 6 April 2027, most unused pension funds and pension death benefits will be included in the value of the estate. That is why the calculator gives two answers: one for a death today and one for a death on or after that date.

HMRC estimates that of around 213,000 estates with inheritable pension wealth in 2027-28, 10,500 will have an inheritance tax bill they would not otherwise have had, 38,500 will pay more, and the average liability will rise by around £34,000.

A worked example shows the size of the change. A single person has an £800,000 estate, including a £400,000 home going to their children, and £400,000 left in a pension. On a death today the bill is £120,000. On a death on or after 6 April 2027 it is £280,000: £160,000 more, which is 40% of the pension.

Pensions can also cost the residence band. A widowed person with a £1,900,000 estate, a £600,000 home going to the children, both late-partner bands and a £400,000 pension pays £360,000 today. From April 2027 the pension takes the estate to £2,300,000, the taper removes £150,000 of residence band, and the bill becomes £580,000: £220,000 more on a £400,000 pension. A pension that goes to a spouse or civil partner stays exempt, but because exemptions aren't deducted for the taper test it still counts towards the £2,000,000; tick the box under the pension input to model that.

Income tax is a separate layer. If the pension holder dies before 75, lump sums are generally tax-free (unless they are above the lump sum and death benefit allowance) and drawdown or annuity income is tax-free. If they die at 75 or over, the beneficiary pays income tax at their own rate on what they take. From April 2027 the same pot can therefore face inheritance tax as part of the estate and then income tax when it is drawn. Our pension calculator covers the income side.

Business and agricultural property relief from April 2026

From 6 April 2026, business property relief and agricultural property relief give 100% relief on the first £2,500,000 of qualifying property in an estate, and 50% relief above that. The allowance was raised from £1m to £2.5m in an announcement on 23 December 2025, and any unused allowance can pass to a surviving spouse or civil partner. Shares designated as "not listed" on a recognised stock exchange, such as AIM shares, get 50% relief. The calculator doesn't model these reliefs, so if an estate includes a farm, a trading business or qualifying shares, the real bill could be much lower than the figure shown.

Thresholds fixed until 5 April 2031

The nil-rate band has been £325,000 since 6 April 2009. The residence band started at £100,000 in April 2017 and reached £175,000 on 6 April 2020. At Budget 2025 the government fixed the nil-rate band, the residence band and the £2,000,000 taper threshold at these levels until 5 April 2031, a year longer than previously planned. By then the nil-rate band will have gone 22 years without an increase.

Fixed thresholds matter because asset values don't stay fixed: any growth in a house, savings or a pension above the threshold is taxed at 40%. On today's rules a single person with a £500,000 estate, including a £300,000 home for their children, pays £0. If the same estate were worth £50,000 more, the bill would be £20,000. We don't forecast house prices or investment returns; the simplest safeguard is to re-run the calculator with current values each year, especially if your estate is near £500,000, £1,000,000 or £2,000,000.

Worked examples

Every figure below comes from the same calculation as the calculator. "Allowances used" is the nil-rate band plus the residence nil-rate band the estate actually uses.

SituationEstateAllowances usedTaxableRateIHTEffective
£500,000 estate, no home to descendants (GOV.UK's example)£500,000£325,000£175,00040%£70,00014.0%
£500,000 estate, £300,000 home left to children£500,000£500,000£0–£00.0%
£1,000,000 estate, £400,000 home to children, single£1,000,000£500,000£500,00040%£200,00020.0%
Same estate, widowed, both late-partner bands 100% unused£1,000,000£1,000,000£0–£00.0%
£2,200,000 estate, £600,000 home, widowed (inside the taper)£2,200,000£900,000£1,300,00040%£520,00023.6%
£800,000 estate incl. £400,000 home, plus £400,000 pension: death today£800,000£500,000£300,00040%£120,00015.0%
The same, death on or after 6 April 2027£1,200,000£500,000£700,00040%£280,00023.3%
£1,000,000 estate, £400,000 home, £67,500 to charity£1,000,000£500,000£432,50036%£155,70015.6%
£700,000 estate, £350,000 home, £200,000 of gifts in the last 7 years£700,000£300,000£400,00040%£160,00022.9%

Single person unless stated. Assumes the home passes outright to direct descendants, and no reliefs apply.

When the tax is due and who pays

Inheritance tax must be paid by the end of the sixth month after the death, and HMRC charges interest if it's paid late. Tax on things that take time to sell, including land and buildings such as the family home, can be paid in equal yearly instalments over 10 years: the first is due at the end of the sixth month after the death, and later instalments carry interest. The executor or administrator deals with this from the estate, and from April 2027 the personal representatives will also report and pay any tax due on pensions.

What this calculator doesn't cover

This is an estimate, not advice. It applies the rules on this page to the figures you enter, and assumes the home you enter qualifies for the residence band and passes to direct descendants. It doesn't model:

If any of these apply, or the estate is close to a threshold, a solicitor or tax adviser can confirm the position. For ways to reduce the bill, see our inheritance tax planning guide.

Frequently asked questions

How much can I leave before inheritance tax is due?

Everyone has a nil-rate band of £325,000. If you leave a home to your children or grandchildren, the residence nil-rate band can add up to £175,000, taking your threshold to £500,000. Married couples and civil partners can pass unused allowances to each other, so the second estate can have up to £1,000,000. These thresholds are fixed until 5 April 2031.

What is the inheritance tax rate for 2026/27?

40%, charged only on the part of the estate above the threshold. The rate falls to 36% if at least 10% of the baseline amount (broadly the estate after debts, other exemptions and the nil-rate band) is left to charity.

Will my pension be subject to inheritance tax?

For deaths on or after 6 April 2027, most unused pension funds and pension death benefits are included in the estate. Death-in-service benefits from a registered pension scheme and dependants' scheme pensions from defined benefit or collective money purchase arrangements stay outside, and pensions left to a spouse, civil partner or registered charity remain exempt. Until then, most unused pension pots sit outside the estate.

Do beneficiaries pay inheritance tax on what they inherit?

Not normally. The tax is paid out of the estate by the person dealing with it, usually the executor. The exceptions: people who received lifetime gifts may have to pay if gifts in the 7 years before death came to more than £325,000, and inherited pensions can carry income tax if the person died at 75 or over.

How does the 7-year rule on gifts work?

No inheritance tax is due on a gift if you live for 7 years after making it, unless it's part of a trust. Gifts made in the 7 years before death use up the nil-rate band first. If they came to more than £325,000, tax on the gifts is reduced by taper relief when they were made 3 to 7 years before death: 32%, 24%, 16% and 8% instead of 40%.

What is the residence nil-rate band?

An extra allowance of up to £175,000 when a home the person lived in goes to their children, grandchildren or other direct descendants. It can't be more than the value of the home passed on, and it falls by £1 for every £2 the estate is worth over £2,000,000. Our residence nil-rate band guide explains it in full.

When does inheritance tax have to be paid?

By the end of the sixth month after the death. HMRC charges interest if it's paid late. Tax on things that take time to sell, such as a house or land, can be paid in equal yearly instalments over 10 years.

Can a couple really pass on £1 million tax-free?

Yes, when the conditions line up: the first partner's nil-rate and residence bands go unused (for example because everything was left to the survivor), the survivor leaves a home worth at least £350,000 to direct descendants, and the survivor's estate is no more than £2,000,000. The calculator shows £0 of tax on a £1,000,000 estate in that situation.

What doesn't this calculator include?

It's an estimate, not advice. It doesn't model agricultural or business property relief, the residence nil-rate band downsizing addition, trusts, quick succession relief, foreign assets, or the tax that people who received large lifetime gifts may owe. If any of those apply, or the estate is close to a threshold, take professional advice.

Inheritance tax by estate value

Worked answers for common estate sizes, for a single person, a single person leaving a home to children, and a married couple's second death:

All estate values £500,000 estate £750,000 estate £1,000,000 estate £1,500,000 estate £2,000,000 estate £3,000,000 estate

Related calculators and guides

Residence nil-rate band explained 7 legal ways to reduce IHT UK inheritance tax if you live abroad Deed of variation Pension calculator Capital gains tax calculator Average net worth by age Net worth calculator

Sources

Rates, thresholds and rules checked on GOV.UK on 21 September 2026.