Inheritance Tax Calculator

Calculate potential Inheritance Tax on your estate based on 2024/25 UK rates. Includes nil-rate bands, residence allowance, and gift taper relief.

Include property, savings, investments, possessions, and any other assets

Transfers between spouses/civil partners are usually tax-free

Extra £175,000 allowance if leaving home to children/grandchildren

Total value of gifts made during the last 7 years before death

Some business assets may qualify for 100% or 50% relief

Your Inheritance Tax Estimate

Standard Rate
Inheritance Tax Due £0.00 Amount payable to HMRC
Taxable Threshold £0.00 Amount above nil-rate band
Net Estate After Tax £0.00 To beneficiaries
Effective Rate 0.0% As % of total estate

Summary

Based on an estate of £0 with allowances of £0, the estimated Inheritance Tax due is £0 at 0% effective rate. Net estate to beneficiaries: £0.

What Is Inheritance Tax?

Inheritance Tax (IHT) is a 40% tax on the part of your estate that’s above your tax-free threshold (nil-rate band). Your estate includes your home, money, investments, and possessions.

For the 2024/25 tax year, the standard nil-rate band is £325,000. If your estate exceeds this, tax is charged at 40% on the excess (or 36% if you leave 10%+ to charity).

Threshold Type Amount (2024/25) Description
Standard Nil-Rate Band £325,000 Basic tax-free allowance per person
Residence Nil-Rate Band £175,000 Additional allowance if leaving home to direct descendants
Total (Single) £500,000 Combined allowance with home transfer
Total (Couple) £1,000,000 Combined with transferable allowances

Spouse & Civil Partner Exemption

Assets passed to a spouse or civil partner are generally exempt from Inheritance Tax. Importantly, any unused nil-rate band can be transferred to the surviving partner, effectively doubling their allowance when they die.

  • Unlimited exemption: No limit on tax-free transfers between spouses
  • Transferable allowance: Unused nil-rate band carries forward
  • Residence band: Can also be transferred if eligible
  • Must claim: Executor must claim the transfer within 2 years of second death

Taper Relief on Gifts

If you make gifts more than 3 years before dying, the Inheritance Tax on those gifts reduces gradually (taper relief). Gifts made 7+ years before death are completely exempt.

Years Before Death Taper Relief Tax Payable
0-3 years 0% 100% of full tax
3-4 years 20% 80% of full tax
4-5 years 40% 60% of full tax
5-6 years 60% 40% of full tax
6-7 years 80% 20% of full tax
7+ years 100% 0% (fully exempt)

Charitable Giving Discount

Leaving 10% or more of your net estate to charity reduces the IHT rate from 40% to 36% on the taxable portion. This can sometimes result in more money reaching beneficiaries despite the larger donation.

  • Qualifying charities: Registered UK charities, museums, universities, political parties
  • Net estate: Calculated after nil-rate bands and other deductions
  • Reduced rate: Applies to entire taxable estate, not just charitable portion

Business & Agricultural Relief

Certain business and agricultural assets may qualify for relief from Inheritance Tax:

  • 100% Business Relief: Sole trader business, partnership shares, controlling holdings in unlisted companies
  • 50% Business Relief: Controlling holdings in listed companies, land/buildings used by your company
  • Agricultural Relief: Farming land and buildings (typically 100% or 50%)

Assets must generally have been owned for at least 2 years to qualify.

Important Disclaimer

This calculator provides estimates only. Your actual Inheritance Tax liability may differ due to:

  • Trust structures and their specific tax treatment
  • Discretionary trusts and 7-year clock rules
  • Life insurance policies written in trust
  • Pension pots (usually outside estate)
  • Jointly owned property and beneficial ownership
  • Debts and liabilities (can be deducted from estate)

Always consult a qualified tax advisor or solicitor for formal advice on your specific situation.

Planning Tips

  • Make regular gifts: £3,000 annual exemption per person, unlimited small gifts up to £250
  • Wedding gifts: Up to £5,000 to children, £2,500 to grandchildren
  • Premium bonds: Held outside estate if over 7 years
  • Lifetime ISAs: Some protection if held 7+ years
  • Write insurance in trust: Keeps life insurance payouts outside estate

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