Inheritance tax is charged at 40% on whatever an estate is worth above its threshold. The standard nil-rate band is £325,000, with a further £175,000 where a home passes to children or grandchildren, and both can be doubled where a spouse died first without using theirs. Below the threshold, no inheritance tax is due.
Enter what the estate is worth and answer two questions. The estimate below uses the current thresholds, and it is honest about the things it cannot account for.
Inheritance tax is a tax on the estate, the property, money and possessions, of someone who has died. It is charged on the value above a threshold, and below that threshold nothing is due. The executor calculates the liability, files the HMRC forms and arranges payment, normally from the estate’s own funds.
Estimate it
What would this estate pay?
Three questions. The figure updates as you type, and nothing is sent anywhere, the calculation runs in your browser.
At a glance
What are the thresholds for each situation?
Four combinations cover most estates. These are the thresholds before any tapering applies.
| Situation | Home passing to descendants | Threshold before tax |
|---|---|---|
| Single person | No home passing to children | £325,000 |
| Single person | Home passing to children | £500,000 |
| Surviving spouse | No home passing to children | £650,000 |
| Surviving spouse | Home passing to children | £1,000,000 |
Above each threshold, the excess is taxed at 40%.
The basic allowance
What is the nil-rate band?
The nil-rate band is the amount every estate can pass before inheritance tax applies. It has been fixed at £325,000 since 2009 and is frozen until at least April 2030, which is why more estates cross it each year without anyone getting richer.
If the estate is worth less than that once debts, funeral costs and exempt transfers are deducted, no inheritance tax is due and HMRC does not normally need to be notified separately.
The property allowance
What is the residence nil-rate band?
An additional £175,000 that applies when the deceased’s main residence passes to direct descendants, children, grandchildren, stepchildren or adopted children. It does not apply to siblings, friends or nephews and nieces.
Combined with the standard band, a single person leaving their home to their children can pass £500,000 before any tax is due.
The residence band tapers for estates above £2,000,000, reducing by £1 for every £2 above that level, and disappears entirely at £2,350,000 for a single person. The calculator applies that taper.
Transferring allowances
What can a surviving spouse pass on?
Assets passing between spouses and civil partners are entirely exempt from inheritance tax. On top of that, any nil-rate band the first spouse did not use transfers to the survivor.
That is how a couple can combine allowances on the second death and reach a threshold of up to £1,000,000. The transfer is not automatic: the executor claims it on form IHT402 as part of administering the estate.
The estate
What counts as part of the estate?
Everything the deceased owned at the date of death, less what the estate owes.
- What counts
- The property, at market value less any mortgage
- Savings and bank accounts
- Investments, ISAs and shares
- Business interests, unless relief applies
- Possessions, vehicles and jewellery
- Life policies paid into the estate rather than into trust
- Certain gifts made in the seven years before death
- What comes off first
- Mortgages and secured lending
- Credit cards, loans and outstanding bills
- Reasonable funeral costs
- Anything passing to a spouse or civil partner
- Anything passing to a qualifying charity
Reducing it
What exemptions and reliefs can reduce the bill?
Several exemptions can reduce a liability substantially, and two of them can remove it altogether. None is applied by the calculator above.
- The spouse exemption
Transfers between spouses and civil partners are entirely exempt, whatever the amount. It is why the tax so often lands on the second death rather than the first.
- Charitable giving
Gifts to qualifying charities are exempt, and leaving 10% or more of the net estate to charity cuts the rate on the rest from 40% to 36%.
- Business Property Relief
Qualifying business assets, a sole trader business, shares in an unlisted company, can attract 100% or 50% relief.
- Agricultural Property Relief
Agricultural land and farmhouses can qualify for relief at 100% where the conditions are met.
Be clear about this
What can this calculator not tell you?
It is a deliberately simple estimate: the nil-rate band, the residence nil-rate band, the transferable spouse allowance and the taper. That is all. These situations need a fuller calculation, through HMRC’s own checker or with professional help.
- Gifts made in the last seven years
Potentially exempt transfers and chargeable lifetime transfers can change the bill substantially, and taper relief applies on a sliding scale. None of it is modelled here.
- Business and Agricultural Property Relief
Qualifying business interests and farmland can attract 100% or 50% relief. Where either applies, this estimate will be far too high.
- Charitable giving
Leaving 10% or more of the net estate to charity reduces the rate from 40% to 36%. This calculator always applies the headline rate.
- Pensions and trusts
Most pensions sit outside the estate for inheritance tax until April 2027, when the rules change. Assets held in trust follow their own rules entirely.
Worked through
What do these numbers look like in practice?
- A £450,000 estate, home to children
Threshold £500,000, so the estate is below it and no inheritance tax is due. For deaths on or after 1 January 2022 this is usually an excepted estate: the values are reported as part of the probate application, with no separate IHT account to file.
- A £750,000 estate, home to children
Threshold £500,000, leaving £250,000 taxable and £100,000 of inheritance tax. The executor files an IHT400 and must pay within six months of the end of the month of death, or interest starts to accrue.
- A £1,200,000 estate, surviving spouse, home to children
Everything passed to the spouse on the first death, which is exempt, so both allowances transfer. The threshold is £1,000,000, leaving £200,000 taxable and £80,000 of inheritance tax. The transferred allowances are claimed on form IHT402.
Why it matters here
How does inheritance tax affect selling the property?
This is where an inheritance tax bill becomes a property problem. HMRC generally wants payment before the Probate Registry issues the grant, but the estate’s money is usually tied up in the house, and the house cannot be sold until the grant is issued.
Executors have a few ways through that. Banks and NS&I can pay HMRC directly from the deceased’s accounts under the Direct Payment Scheme, tax on property can be paid in instalments, and a sale can be prepared and even agreed before the grant arrives. Selling before probate is granted covers what is and is not possible in that window, and the probate property process shows where the tax sits in the wider timeline.
Where the deadline is the binding constraint, selling an inherited house fast sets out that route honestly, including what it costs.
Questions
What do executors ask about inheritance tax?
What is the inheritance tax threshold?
The standard nil-rate band is £325,000. Where a home passes to children or grandchildren, a residence nil-rate band of £175,000 is added, giving a combined threshold of £500,000. Where a spouse died first without using theirs, both can be doubled.
Does this calculator account for gifts in the last seven years?
No. It works on the value of the estate at the date of death. Gifts made within seven years of death can add to the taxable estate and carry their own taper relief, so where significant gifts were made this estimate will be too low.
Does a surviving spouse pay inheritance tax?
No. Anything passing to a spouse or civil partner is exempt, whatever it is worth. The unused allowances then transfer, which is what can produce a threshold of up to a million pounds on the second death.
Does inheritance tax have to be paid before probate is granted?
Usually, yes, at least in part. HMRC generally requires payment, or an arrangement to pay, before the Probate Registry issues the grant. Since the estate’s money is often locked in the property, that sequencing is what puts executors under time pressure.
Read next
Where can you read more?
Every guide is listed on resources for executors, and the probate glossary defines the terms.
No obligation
Do you have a tax deadline and a property to sell?
If the estate owes inheritance tax and the money is in the house, tell us the postcode and the deadline. We will tell you honestly whether we can help you meet it, and what it would cost.
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