UK Inheritance Tax Calculator
Estimate the Inheritance Tax due on your estate in seconds — factoring in nil-rate bands, the residence allowance, gifts and charitable legacies.
Your estate details
Doubles both the £325,000 nil-rate band and the £175,000 residence nil-rate band.
Unlocks the residence nil-rate band (children, grandchildren, stepchildren or adopted children).
The residence allowance is capped at the value of the home.
Added back to the estate. Taper relief may reduce tax on gifts made 3–7 years before death (see note below).
Exempt from IHT. Leave 10%+ of the net estate to charity and the rate falls from 40% to 36%.
Estimated Inheritance Tax
Effective rate on the estate: 26.7%
Estimate only — confirm with Jungle Tax before acting. Based on 2024/25 rates and thresholds.
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Understanding UK Inheritance Tax
Inheritance Tax (IHT) is a tax on the estate — the property, money and possessions — of someone who has died. For high-net-worth individuals and cross-border families, it is one of the most significant, and most avoidable, liabilities in the entire tax system. At a headline rate of 40% on everything above your available allowances, an estate worth several million pounds can face a seven-figure tax bill unless it is structured carefully during your lifetime. This inheritance tax calculator gives you a fast, transparent estimate of that exposure so you can see where planning could make the biggest difference.
The starting point is the nil-rate band, currently £325,000 per person. Everything in your estate below this figure is taxed at 0%. On top of this, the residence nil-rate band adds up to a further £175,000 where your main home passes to direct descendants. Because unused allowances transfer between spouses and civil partners, a married couple can, in the right circumstances, pass on up to £1 million entirely free of Inheritance Tax before the 40% rate applies to the excess.
Who Inheritance Tax affects most
Inheritance Tax was once seen as a concern only for the very wealthy, but decades of frozen thresholds and rising property values have pulled far more estates into the net. The nil-rate band has been fixed at £325,000 since 2009 and is currently frozen until at least 2028, while house prices — particularly in London and the South East — have climbed substantially. The result is that many families who would never describe themselves as wealthy now find their estates exposed, often simply because of the value locked up in the family home.
For genuinely high-net-worth individuals, the stakes are far higher. Portfolios of investment property, business interests, share portfolios, art, and offshore assets can push an estate well beyond the £2 million taper threshold, at which point the valuable residence nil-rate band begins to disappear entirely. For internationally mobile families the picture is more complex still, because domicile — not just residence — determines how much of your worldwide wealth falls within the UK Inheritance Tax net.
The cross-border dimension
This is where Jungle Tax’s specialism in US and UK cross-border affairs becomes critical. A UK-domiciled individual is liable to Inheritance Tax on their worldwide assets, wherever they are located. A non-domiciled individual is generally only liable on assets situated in the UK. But the rules on deemed domicile mean that anyone who has been UK-resident for at least 15 of the previous 20 tax years is treated as UK-domiciled for Inheritance Tax, dragging their global wealth into charge whether they intended it or not.
For American families in particular, the interaction between UK Inheritance Tax and the US federal estate and gift tax regime creates both risk and opportunity. The two systems have very different exemption levels, different treatment of gifts and trusts, and are bridged by the US–UK Estate and Gift Tax Treaty. Without joined-up advice, families can find the same assets exposed to tax on both sides of the Atlantic, or miss valuable treaty reliefs and foreign tax credits. Coordinated planning across both regimes is essential, not optional.
How the calculation works
At its core, the Inheritance Tax calculation is straightforward, even if the planning around it is not. You start with the net value of the estate, add back certain gifts made in the seven years before death, deduct exempt legacies such as gifts to a spouse or charity, and then subtract the available nil-rate bands. Whatever remains is taxed — normally at 40%, or at a reduced 36% where a substantial charitable legacy is left. The table below shows how the standard rate applies to estates of different sizes for a single individual with a full nil-rate band but no residence allowance.
| Estate value | Nil-rate band | Taxable amount | IHT at 40% | Effective rate |
|---|---|---|---|---|
| £300,000 | £325,000 | £0 | £0 | 0.0% |
| £500,000 | £325,000 | £175,000 | £70,000 | 14.0% |
| £1,000,000 | £325,000 | £675,000 | £270,000 | 27.0% |
| £2,000,000 | £325,000 | £1,675,000 | £670,000 | 33.5% |
| £5,000,000 | £325,000 | £4,675,000 | £1,870,000 | 37.4% |
Illustrative figures based on 2024/25 rates for a single individual with no residence nil-rate band. The effective rate rises towards 40% as the estate grows and the fixed allowance becomes a smaller proportion of the total.
Gifts and the seven-year rule
Lifetime giving is one of the most powerful ways to reduce an Inheritance Tax bill, but timing is everything. Most gifts to individuals are potentially exempt transfers: if you survive seven years from the date of the gift, it leaves your estate entirely. Die within seven years and the gift is added back, using up your nil-rate band first. Where gifts exceed the band, taper relief can reduce the tax on the excess, as the following table shows.
| Years between gift and death | Taper relief | Effective rate on the gift |
|---|---|---|
| Less than 3 years | 0% | 40% |
| 3 to 4 years | 20% | 32% |
| 4 to 5 years | 40% | 24% |
| 5 to 6 years | 60% | 16% |
| 6 to 7 years | 80% | 8% |
| 7 years or more | 100% | 0% |
A crucial and often misunderstood point is that taper relief reduces the tax on the gift, not the value of the gift itself, and it only bites once the total of your gifts exceeds the nil-rate band. Beyond potentially exempt transfers, there are also generous annual exemptions — the £3,000 annual gift allowance, small gifts of up to £250 per person, gifts in consideration of marriage, and, most valuable of all for those with high incomes, the exemption for regular gifts out of surplus income, which fall outside the seven-year rule entirely when properly documented.
Reliefs, trusts and charitable legacies
For business owners and entrepreneurs, Business Relief and Agricultural Relief can reduce the value of qualifying assets by 50% or 100%, making them cornerstones of planning for family companies and landed estates — though reforms have been announced that will cap the most generous reliefs from future tax years. Trusts remain a flexible tool for controlling how and when wealth passes to the next generation, ring-fencing assets from the beneficiaries’ own estates. And the reduced 36% charitable rate rewards philanthropy: leaving at least 10% of your net estate to charity not only removes that legacy from tax but lowers the rate on everything else.
What ties all of this together is that Inheritance Tax planning is highly personal and deeply time-sensitive. The most effective strategies — lifetime gifting, trust structures, treaty planning for international families — all work best when put in place years in advance. Use the calculator above to understand your starting position, then speak to our dual-qualified specialists to build a plan that protects your family’s wealth across both the UK and US systems.
Frequently Asked Questions
Common questions people ask about UK Inheritance Tax and estate planning.
What is the current UK Inheritance Tax threshold?+
For the 2024/25 tax year the standard nil-rate band is £325,000 per person. Estates below this figure normally pay no Inheritance Tax. A further residence nil-rate band of up to £175,000 can apply when a main home passes to direct descendants, and any unused nil-rate band can be transferred to a surviving spouse or civil partner, so a married couple can potentially pass on up to £1 million tax-free.
What rate is UK Inheritance Tax charged at?+
Inheritance Tax is charged at 40% on the value of your estate above the available nil-rate bands. A reduced rate of 36% applies where you leave at least 10% of your net estate (the baseline amount) to a qualifying charity. Some lifetime gifts made within seven years of death can be taxed at a tapered rate of between 8% and 32%.
How does the residence nil-rate band work?+
The residence nil-rate band (RNRB) gives an extra allowance of up to £175,000 in 2024/25 when your main residence, or a share of it, is left to direct descendants such as children, stepchildren, adopted children or grandchildren. The RNRB is reduced by £1 for every £2 that your total estate exceeds £2 million, so it tapers away completely for larger estates.
Can I transfer my spouse’s unused nil-rate band?+
Yes. When the first spouse or civil partner dies, any percentage of their nil-rate band and residence nil-rate band that was not used can be transferred to the survivor. This means the surviving partner’s estate can benefit from up to two full nil-rate bands and two residence nil-rate bands, potentially sheltering up to £1 million from Inheritance Tax.
Are gifts subject to Inheritance Tax?+
Gifts you make more than seven years before death are usually free of Inheritance Tax. Gifts made within seven years of death are called potentially exempt transfers and may use up part of your nil-rate band, or be taxed if they exceed it. Taper relief can reduce the tax on gifts made between three and seven years before death.
What is the seven-year rule for gifts?+
The seven-year rule determines whether a lifetime gift falls back into your estate for Inheritance Tax. If you survive seven years from the date of the gift, it is completely exempt. If you die within seven years, the gift is added back and set against your nil-rate band first, with any excess potentially taxable and subject to taper relief.
How does taper relief reduce Inheritance Tax on gifts?+
Taper relief reduces the tax payable on gifts made between three and seven years before death, but only where the total gifts exceed the nil-rate band. The reduction is 20% for gifts made 3 to 4 years before death, 40% for 4 to 5 years, 60% for 5 to 6 years and 80% for 6 to 7 years. Taper relief reduces the tax, not the value of the gift.
Do charitable gifts reduce Inheritance Tax?+
Yes, in two ways. Gifts to qualifying UK charities are exempt from Inheritance Tax, so they leave your taxable estate entirely. In addition, if you leave at least 10% of your net estate to charity, the Inheritance Tax rate on the rest of your estate falls from 40% to 36%.
How much can a married couple leave tax-free?+
A married couple or civil partners can potentially pass on up to £1 million free of Inheritance Tax. This is made up of two nil-rate bands of £325,000 and two residence nil-rate bands of £175,000, provided a main home is left to direct descendants and the estate is below the £2 million taper threshold.
Does Inheritance Tax apply to non-UK domiciled individuals?+
Domicile is central to UK Inheritance Tax. UK-domiciled individuals are liable on their worldwide assets, while non-domiciled individuals are generally only liable on their UK-situated assets. Long-term UK residents can become deemed domiciled for Inheritance Tax after 15 of the previous 20 tax years, which brings worldwide assets into charge. Cross-border families should take specialist advice.
How do I calculate the value of my estate for Inheritance Tax?+
Your estate includes property, savings, investments, business interests, life policies not written in trust, and personal possessions, less any debts and liabilities such as a mortgage or loans. Certain gifts made in the seven years before death are added back. The net figure is then compared with your available nil-rate bands to work out the taxable amount.
When does Inheritance Tax need to be paid?+
Inheritance Tax is normally due by the end of the sixth month after the person died. For example, if death occurred in January, tax must be paid by 31 July. Tax on some assets such as property can be paid in instalments over ten years. Interest is charged on tax paid late.
Is a pension included in my estate for Inheritance Tax?+
Most defined contribution pensions currently sit outside your estate for Inheritance Tax and can pass to beneficiaries free of it, which makes pensions a valuable estate-planning tool. However, the treatment of pensions is under review and reform has been announced for future years, so it is important to confirm the current rules before relying on this planning.
How can I legally reduce my Inheritance Tax bill?+
Common strategies include using your annual gift exemptions, making regular gifts out of surplus income, giving assets more than seven years before death, leaving assets to a spouse or charity, using trusts, and claiming Business Relief or Agricultural Relief where available. Effective planning is highly personal and should be structured with professional advice.
What is Business Relief and how does it affect Inheritance Tax?+
Business Relief can reduce the value of qualifying business assets by 50% or 100% for Inheritance Tax purposes. It applies to interests in unquoted trading businesses, shares in unlisted companies and certain other business assets held for at least two years. This relief is a key planning tool for entrepreneurs and business owners, though reforms to the reliefs have been announced for future years.
Do I need to complete an Inheritance Tax return?+
The executors or personal representatives are responsible for reporting the estate to HMRC. Depending on the size and complexity of the estate, this may involve a full account on form IHT400 or a simpler excepted estate procedure. Even where no tax is due, reporting is often still required before probate can be granted.
Protect your family’s wealth
Our dual-qualified US and UK specialists help high-net-worth families reduce Inheritance Tax exposure and coordinate estate planning across both tax systems. Book a confidential consultation today.
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