Inheritance Tax Calculator 2026/27
By Omair SaoLast reviewed — nil-rate bands frozen to April 2031 and the pension rules legislated in Finance Act 2026 for deaths on or after 6 April 2027. See how we check our figures.
Estimate the inheritance tax your family would pay on your home, savings, investments and pension. The calculator applies the £325,000 nil-rate band and the £175,000 residence nil-rate band with its £2 million taper. It also handles allowances transferred from a late spouse, gifts made in the last seven years with taper relief, and the 36% rate for charitable estates. Switch the April 2027 pension rule on or off to see exactly what it costs.
This calculator gives an estimate only and is not tax, legal or financial advice. It assumes a UK estate with no trusts, business or agricultural relief or gifts with reservation of benefit, applies the 2026/27 nil-rate bands (frozen until April 2031) and treats the pension figure as fully within the estate from 6 April 2027. A solicitor or tax adviser can confirm the position for a particular estate.
Inheritance tax rates and allowances 2026/27
| Item | Amount | Notes |
|---|---|---|
| Nil-rate band | £325,000 | Frozen until April 2031; transferable between spouses and civil partners |
| Residence nil-rate band | £175,000 | Home left to direct descendants; tapered above a £2 million estate |
| Maximum for a surviving spouse with full transfers | £1,000,000 | £650,000 + £350,000 |
| Standard rate | 40% | On the value above the allowances |
| Reduced rate | 36% | If 10% or more of the baseline amount goes to charity |
| Annual gift exemption | £3,000 | Plus one unused previous year |
| Small gifts | £250 per person | Not to anyone who received part of the £3,000 |
| Pensions in the estate | From 6 April 2027 | Unused pots and lump sum death benefits, except to a spouse, civil partner or charity |
| Business and agricultural relief | 100% on the first £2.5m | 50% above that and on AIM shares, for deaths from 6 April 2026 |
Sources: GOV.UK, Inheritance Tax, residence nil rate band and the technical note on pensions.
Taper relief on gifts made within seven years of death
Taper relief reduces the tax on the part of a gift that exceeds the nil-rate band. It never reduces the gift itself, and a gift inside the nil-rate band gets no relief because there is no tax to reduce.
| Years between gift and death | Tax rate on the excess | Relief |
|---|---|---|
| Less than 3 years | 40% | 0% |
| 3 to 4 years | 32% | 20% |
| 4 to 5 years | 24% | 40% |
| 5 to 6 years | 16% | 60% |
| 6 to 7 years | 8% | 80% |
| 7 years or more | 0% | Gift falls out of the estate entirely |
What changes on 6 April 2027
Finance Act 2026 brings most unused pension funds and pension death benefits into the estate for deaths on or after 6 April 2027. In practice this means:
- Defined contribution pots you have not drawn, and lump sums a scheme pays on death, are valued and added to everything else you own.
- Anything passing to a spouse or civil partner, or to a charity, stays exempt, so leaving the pension to a partner defers rather than removes the charge.
- Death in service lump sums, dependants' scheme pensions and dependants' annuities are excluded.
- Your executors report the pension value; schemes must value it within 28 days and can pay the tax straight to HMRC from the pot.
- If you die aged 75 or over, beneficiaries still pay income tax on what they draw, but the part used to pay inheritance tax is taken out of their taxable income to avoid a double charge.
Read our full guide to pensions and inheritance tax from April 2027 for worked examples and planning options.
Who this inheritance tax calculator is for
- Homeowners who want to know whether the value of their house, savings and pension will push their estate over the tax-free allowances.
- Anyone with a defined contribution pension pot, because from 6 April 2027 unused pension funds count towards inheritance tax for the first time.
- Widows and widowers checking how much of a late spouse's unused allowance can be added to their own.
- People weighing up gifts to family, who want to see how the seven-year rule and taper relief would treat them.
- Executors making an early estimate of the bill before probate, and families deciding whether a gift to charity would bring the rate down to 36%.
How the inheritance tax calculator works
- 1
Add up the estate and take off the debts
Everything you own at death counts: your home, other property, savings, investments, life insurance not written in trust and possessions. Mortgages, other debts and reasonable funeral costs are deducted to give the net estate. From 6 April 2027 most unused pension pots and lump sum death benefits are added in as well; the calculator lets you compare both positions.
- 2
Take off what goes to a spouse or charity
Anything left to a UK-resident spouse or civil partner is exempt without limit, as is anything left to a registered charity. Only the rest, the chargeable estate, can be taxed.
- 3
Apply the allowances
The first £325,000 of the chargeable estate (the nil-rate band) is taxed at 0%. If your home passes to children, grandchildren or other direct descendants, a further £175,000 residence nil-rate band applies, limited to the value of the home and reduced by £1 for every £2 the net estate exceeds £2 million. A surviving spouse can also inherit the unused share of both allowances, up to £650,000 and £350,000 in total. Both figures are frozen until April 2031.
- 4
Deal with gifts made in the last seven years
Gifts made within seven years of death are added back and use up the nil-rate band first, oldest gift first. Any part not covered is taxed at 40%, reduced by taper relief to 32%, 24%, 16% or 8% for gifts made three, four, five or six years before death. Gifts more than seven years old are ignored.
- 5
Charge 40%, or 36% with a charity gift
Whatever remains is taxed at 40%. If at least 10% of the baseline amount (the chargeable estate before the charity gift, less the nil-rate band) goes to charity, the whole estate is taxed at 36% instead. The calculator shows how much more you would need to leave to reach the threshold.
Worked examples
Single homeowner with a pension, dying after 6 April 2027
A widower leaves a £400,000 house to his daughter, £150,000 of savings and a £200,000 unused pension pot. He made no gifts and has no debts.
| Net estate including the pension | £750,000 |
| Nil-rate band | £325,000 |
| Residence nil-rate band (home to a child) | £175,000 |
| Taxable estate | £250,000 |
| Inheritance tax at 40% | £100,000 |
| Tax under the pre-April 2027 rule (pension excluded) | £20,000 |
| Extra tax caused by the pension rule | £80,000 |
Result: Counting the pension turns a £20,000 bill into £100,000. His daughter receives £650,000 of the £750,000 estate. Spending or gifting from the pension in retirement, or leaving part of it to charity, would reduce the charge.
Widow with transferred allowances and a £1.3 million estate
Her husband left everything to her when he died, so none of his allowances were used. She leaves a £600,000 home and £400,000 of investments to her children and has a £300,000 pension.
| Net estate | £1,300,000 |
| Nil-rate band with 100% transfer | £650,000 |
| Residence nil-rate band with 100% transfer | £350,000 |
| Taxable estate | £300,000 |
| Inheritance tax at 40% | £120,000 |
| Tax under the pre-April 2027 rule | £0 |
Result: The transferred allowances cover £1 million, so before April 2027 there would be no tax at all. Once the £300,000 pension is counted the family pays £120,000: 40p of every pound of the pension.
£1 million estate with a gift to charity
A single person with no home to pass to descendants leaves a £1,000,000 estate, including £70,000 to a cancer charity.
| Net estate | £1,000,000 |
| Exempt gift to charity | £70,000 |
| Chargeable estate | £930,000 |
| Baseline amount for the charity test£1,000,000 − £325,000 | £675,000 |
| 10% of the baselineThe £70,000 gift passes the test | £67,500 |
| Taxable estate£930,000 − £325,000 | £605,000 |
| Inheritance tax at 36% | £217,800 |
Result: With a £50,000 charity gift the rate would stay at 40% and the bill would be £250,000. Giving £20,000 more to charity cuts the tax by £32,200, so the other beneficiaries lose only £12,200 less than the charity gains.
A £400,000 gift made four and a half years before death
A father gave his son £400,000 towards a house four and a half years before he died leaving a further £500,000, none of it a home passing to descendants.
| Gift within seven years | £400,000 |
| Covered by the nil-rate band | £325,000 |
| Taxable part of the gift | £75,000 |
| Rate after taper relief (4 to 5 years) | 24% |
| Tax on the gift, paid by the son | £18,000 |
| Nil-rate band left for the estate | £0 |
| Tax on the £500,000 estate at 40% | £200,000 |
| Total inheritance tax | £218,000 |
Result: Taper relief only reduces the tax on the part of a gift above the nil-rate band, and the gift uses the allowance that the estate would otherwise have had. Had the father survived seven years, the gift would have dropped out entirely and the estate's own bill would have fallen to £70,000.
Figures use the 2026/27 rates and rules described above, are rounded to the nearest pound, and were last checked against GOV.UK on 25 September 2026.
Assumptions and limitations
- The deceased was a long-term UK resident and the spouse or civil partner receiving exempt gifts is too. Gifts to a non-resident spouse are exempt only up to £325,000.
- The pension figure is the value of unused pots and lump sum death benefits that would pass to someone other than a spouse, civil partner or charity. Death in service benefits and dependants' scheme pensions are excluded by the new rules.
- The residence nil-rate band is limited to the equity in the home and assumes the whole home passes to direct descendants. Downsizing additions, and homes held in some trusts, are not modelled.
- Gifts are entered after exemptions. Each tax year you can give £3,000 free of inheritance tax (plus one unused year carried forward), £250 to any number of people, wedding gifts of up to £5,000 to a child and regular gifts from surplus income.
- Business and agricultural property relief is not applied. From 6 April 2026 qualifying assets get 100% relief on the first £2.5 million per person and 50% above that; shares listed on AIM get 50% only.
- Assets held in trust, jointly owned assets passing by survivorship and foreign assets can change the calculation and are outside the scope of this estimate.
- This is an estimate for planning purposes. Executors must use HMRC's forms and valuations, and complex estates need professional advice.
Official sources
The figures used by this calculator come from the following official pages. Read how we check our figures.
- Inheritance Tax — GOV.UK — Threshold, rates and the 36% charity rate
- Inheritance Tax: residence nil rate band — GOV.UK — The £175,000 allowance and the £2 million taper
- Inheritance Tax: gifts — GOV.UK — The seven-year rule, exemptions and taper relief
- Transferring an unused Inheritance Tax threshold — GOV.UK
- Inheritance Tax on pensions: technical note — GOV.UK — The rules for deaths on or after 6 April 2027
- How Inheritance Tax works: thresholds, rules and allowances — GOV.UK
Further reading on IncomeFix
- Pensions and inheritance tax from April 2027 — What the new rule covers and how to plan for it
- AIM ISA and Business Relief
- Discretionary trusts
- Company pension contributions
Related Tools and Guides
Frequently Asked Questions
What is the inheritance tax threshold for 2026/27?
The nil-rate band is £325,000 and has been since 2009; it is frozen until April 2031. If you leave your home to children or grandchildren you get a further £175,000 residence nil-rate band, and a surviving spouse or civil partner can inherit any unused allowance, so a couple can pass on up to £1 million tax-free. Above the allowances the rate is 40%.
Will my pension be subject to inheritance tax?
For deaths before 6 April 2027, unused defined contribution pension pots usually sit outside the estate and no inheritance tax is due. Finance Act 2026 changes this: for deaths on or after 6 April 2027, most unused pension funds and lump sum death benefits are added to the estate and taxed at 40% above the allowances, unless they pass to a spouse, civil partner or charity. Death in service benefits and dependants' scheme pensions stay exempt.
How does the seven-year rule on gifts work?
Gifts to individuals are potentially exempt transfers: they escape inheritance tax completely if you live seven years after making them. If you die sooner they are added back to your estate and use up your nil-rate band first. Tax on the part of a gift above the nil-rate band is reduced by taper relief once three years have passed: 32% after three years, 24% after four, 16% after five and 8% after six.
How much can I give away each year without inheritance tax?
£3,000 a year in total, plus any unused £3,000 from the previous year. On top of that you can give £250 to as many people as you like (not the same people who got part of the £3,000), wedding gifts of £5,000 to a child, £2,500 to a grandchild or £1,000 to anyone else, and regular gifts out of surplus income of any size provided they do not reduce your standard of living.
What is the residence nil-rate band and who gets it?
An extra £175,000 allowance for deaths since 6 April 2017 when a home, or a share of one, passes to direct descendants: children, stepchildren, adopted or foster children, grandchildren and their spouses. It cannot exceed the value of the home, and it tapers away by £1 for every £2 of net estate over £2 million, disappearing completely at £2.35 million for a single person. Unused residence nil-rate band also transfers to a surviving spouse.
When does the 36% inheritance tax rate apply?
When you leave at least 10% of the baseline amount, broadly the chargeable estate after deducting the nil-rate band but before the charity gift, to registered charities. The whole estate is then taxed at 36% instead of 40%, and because the charity gift is itself exempt, giving slightly more to charity can leave your other beneficiaries better off.
Who pays the inheritance tax and when?
The executors or personal representatives pay it from the estate, normally before probate is granted and within six months of the end of the month of death; after that HMRC charges interest. Tax on property can be paid in ten annual instalments. Tax on a lifetime gift is paid by the person who received it. From April 2027 personal representatives also report unused pensions, and pension schemes must supply valuations within 28 days and can pay the tax directly from the pot.
Could the Autumn Budget on 28 October 2026 change inheritance tax?
Possibly. Inheritance tax is one of the taxes commentators expect the Chancellor to look at, with the seven-year rule and capital gains uplift on death both discussed, but nothing has been announced. The £325,000 and £175,000 allowances are already legislated to stay frozen until April 2031, and the pension change from April 2027 is already law.