UK Inheritance Tax Calculator — Methodology

Last verified 5 May 2026 against HMRC Inheritance Tax guidance. Calculator at /uk/tax/inheritance-tax-calculator/.

What this calculator does

Estimates the UK inheritance tax due on an estate after the nil-rate band (NRB), residence nil-rate band (RNRB), spouse transfer, charitable bequests, and business/agricultural property relief. Models the RNRB taper above £2,000,000 and the reduced 36% rate when 10% or more of the net estate is left to charity.

The formula

IHT due = max(0, (E - D - C - R) - (NRB_eff + RNRB_eff)) × rate

Where:
  E         = gross estate value (incl. property)
  D         = debts and final expenses
  C         = charitable bequests
  R         = business / agricultural property relief
  NRB_eff   = £325,000 × (1 + inheritedNrbPct / 100)
  RNRB_eff  = max(0, RNRB_base × (1 + inheritedRnrbPct / 100)
              - max(0, E - £2,000,000) / 2)
              capped at the value of the qualifying residence
              passed to direct descendants
  rate      = 0.40, or 0.36 if charitable gifts ≥ 10% of the
              baseline amount (net estate above NRB)

Lifetime gifts within 7 years of death are added back to the
estate, with simplified pro-rata taper for years 3-7.

Authoritative sources

• Inheritance Tax overview
• IHT thresholds and interest rates
• IHT manual on residence nil-rate band (IHTM46001)
• Reduced rate for charitable estates

Assumptions and limitations

• The 7-year taper relief on lifetime gifts is modelled at simplified pro-rata rate. Actual taper applies in bands (years 0-3 0%, 3-4 20%, 4-5 40%, 5-6 60%, 6-7 80%).
• Business and agricultural property relief is applied as a flat reduction rather than per-asset evaluation.
• The calculator does not model the 10% charitable test separately for free estate, settled property, and joint property components.
• Trust planning, deed of variation, and other complex IHT mitigation strategies are out of scope.
• This is an estimate for educational purposes. For estate-planning advice, consult a qualified solicitor or financial planner.

Source data

The rates used by this calculator are exported as machine-readable CSVs:

• IHT thresholds 2026/27 /data/iht-thresholds-2026-27.csv

These CSVs regenerate automatically from our canonical rate data at every build, ensuring the calculator output and the published rate data stay in sync.

Verification log

• 5 May 2026: All IHT constants verified against gov.uk/inheritance-tax via Cowork audit cycle 5
• 5 May 2026: NRB freeze extended to April 2030, RNRB freeze to April 2030 (Autumn Budget 2024)