Property + investments + cash + other assets at date of death.
Mortgages, loans, credit cards, funeral costs.
Main home or share of it left to children/grandchildren. Required for the residence nil-rate band (RNRB) — set to 0 if no qualifying property.
IHT due
£110,000
18.3% of gross estate · Net to beneficiaries: £490,000
Available threshold
£325,000
NRB + RNRB combined
Taxable estate
£275,000
After thresholds
Effective rate on estate
18.33%
IHT @ 40% on taxable
How your threshold is calculated
Standard NRB
£325,000
+ RNRB (property to descendants)
+£0
Total threshold
£325,000
RNRB not applied — only available when a main residence is left to direct descendants. Enter a value above for "Property value passed to direct descendants" to claim it.
RNRB not applied — only available when a main residence is left to direct descendants (children, grandchildren, stepchildren).
How is UK Inheritance Tax calculated in 2026/27?
Inheritance Tax (IHT) is charged at 40% on the value of an estate above the available nil-rate band. The standard nil-rate band (NRB) is £325,000 — frozen at this level since 2009 and now extended to April 2030 by the Autumn Statement 2022. On top of the NRB, eligible estates can claim the Residence Nil-Rate Band (RNRB) of up to £175,000 when a main home is passed to direct descendants. Married couples and civil partners can transfer any unused proportion of these allowances, meaning a couple can effectively pass on up to £1,000,000 IHT-free where all the conditions are met. If at least 10% of the net estate is left to charity, the IHT rate on the remainder is reduced from 40% to 36%. Lifetime gifts within the seven years before death are added back into the estate, with taper relief on the IHT due. For lifetime asset disposals (CGT), see our Capital Gains Tax Calculator.
The £1m IHT threshold — how spouses combine allowances
Worked example: a married couple with a combined £1,000,000 estate including a £400,000 home left to children. When the first spouse dies and leaves everything to the survivor, the spouse exemption means no IHT is due — and crucially, none of their NRB or RNRB is used. On the second death, the survivor has their own £325,000 NRB plus their own £175,000 RNRB, plus the inherited £325,000 NRB and inherited £175,000 RNRB, totalling £1,000,000 of tax-free threshold. £1m estate − £1m threshold = £0 IHT. Pensions normally sit outside the IHT estate, so SIPPs and workplace pots can be a powerful estate-planning tool — see our Pension Tax Relief Calculator for the contribution side and our Pension Pot Projection Calculator to project pots that pass outside the estate.
The £2m RNRB taper trap
Estates above £2,000,000 lose £1 of RNRB for every £2 over the threshold. An individual with the full £175,000 RNRB sees it fully tapered at an estate value of £2,350,000; a couple with the full transferable £350,000 loses it completely at £2,700,000. For high-net-worth families, lifetime gifting strategies, business property relief, agricultural relief, and trust structures can keep estates below £2m to preserve the RNRB. Life insurance written in trust pays out outside the estate, useful for IHT planning. This is structuring information, not advice — IHT planning is highly specific to your assets, family and timeline, so consult a qualified solicitor or chartered tax adviser before acting.
Frequently asked questions
What is the inheritance tax threshold in 2026/27?
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The standard nil-rate band (NRB) is £325,000 per individual and has been frozen at this level since 2009. The Autumn Statement 2022 extended that freeze to April 2030. On top of this, eligible estates also get the Residence Nil-Rate Band (RNRB) of up to £175,000 when a main home is passed to direct descendants. A surviving spouse or civil partner can inherit any unused proportion of their late partner's NRB and RNRB, taking the combined threshold to a maximum of £1,000,000 per couple where all conditions are met.
How does the residence nil-rate band work?
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The RNRB adds up to £175,000 to your IHT-free threshold when you leave a 'qualifying residential interest' (typically your main home or share of it) to direct descendants — children, stepchildren, adopted children, foster children or grandchildren. The RNRB is capped at the value of the property left to descendants: a £100,000 home only attracts £100,000 of RNRB. It tapers away by £1 for every £2 of estate value above £2,000,000, so it is fully lost at £2.35m for individuals or £2.7m for couples with full transferable allowances.
Can married couples leave £1 million tax-free to children?
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Yes — but only when all the conditions are met. A married couple where the first to die leaves everything to the survivor uses zero of their NRB and RNRB (the spouse exemption covers it all). On the second death, the survivor has their own £325,000 NRB plus £175,000 RNRB, plus the full inherited £325,000 NRB and £175,000 RNRB — a combined £1,000,000 tax-free threshold. To qualify, a main home worth at least £350,000 must pass to direct descendants and the estate must be below the £2,000,000 RNRB taper threshold.
Does giving 10% to charity reduce inheritance tax?
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Yes. If you leave at least 10% of your 'baseline amount' (broadly the taxable estate after the nil-rate bands) to a registered charity, the IHT rate on the rest of the taxable estate drops from 40% to 36%. For example, on a £100,000 taxable estate, a £10,000 charity gift saves £4,000 of IHT (36% × £90,000 = £32,400 versus 40% × £100,000 = £40,000). The charity gift itself is also fully exempt. The 10% test is calculated separately for each component of the estate (free estate, settled property, joint property), but most simple estates only have a single component.
What is the 7-year rule for gifts?
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Under the 7-year rule, lifetime gifts fall completely outside your estate for IHT if you survive seven years from the date of the gift. Gifts made within seven years of death are 'potentially exempt transfers' (PETs) and may be subject to IHT, but taper relief reduces the tax on gifts made 3–7 years before death: 20% of the full rate at 3–4 years, 40% off at 4–5 years, 60% off at 5–6 years, and 80% off at 6–7 years. The annual gift exemption of £3,000 is always free of IHT regardless.
When does the RNRB get tapered?
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The Residence Nil-Rate Band tapers when the gross estate (before reliefs but including the home) exceeds £2,000,000. For every £2 above the threshold, you lose £1 of RNRB. An individual with the full £175,000 RNRB loses it completely at an estate value of £2,350,000. A widowed person with the full inherited £350,000 RNRB loses it completely at £2,700,000. The taper bites on the gross estate value — so generous lifetime gifting, business property relief and pension structuring (pensions normally sit outside the estate) can all help keep the estate below £2m and protect the RNRB.
Calcsmith provides estimates based on the 2026/27 IHT rules. Not financial or legal advice; consult a qualified solicitor or chartered tax adviser for estate planning.