Inheritance Tax Calculator UK — Know Your Estate Tax Liability
Calculate potential Inheritance Tax on your estate in the UK. Understand the nil-rate band residence nil-rate band and available exemptions to minimize IHT.
Inheritance Tax is charged at 40% on estates above the nil-rate band of £325000 in the UK. However with the residence nil-rate band of £175000 for property left to direct descendants the effective threshold rises to £500000 per person or £1 million for married couples. Understanding available exemptions and reliefs is crucial for estate planning to minimize the IHT burden on your beneficiaries.
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Key Information
| Parameter | Details |
|---|---|
| Nil-Rate Band | £325,000 |
| Residence Nil-Rate Band | £175,000 (for property to children) |
| Combined Threshold (married) | £1,000,000 |
| IHT Rate | 40% on amount above threshold |
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Use Calculator NowFrequently Asked Questions
How much is inheritance tax on £500000?
For a single person with a £500000 estate including their home left to children: the nil-rate band of £325000 plus residence nil-rate band of £175000 = £500000 threshold. IHT would be £0. However without property or if not left to direct descendants only the £325000 nil-rate applies and IHT would be 40% of £175000 = £70000.
How to reduce inheritance tax UK?
Transfer assets using the annual gift exemption of £3000 per year. Make gifts from surplus income which are immediately IHT-free. Leave 10%+ of your estate to charity to reduce the IHT rate from 40% to 36%. Use trusts for assets above your nil-rate band. Take out a life insurance policy written in trust to cover the expected IHT bill so beneficiaries receive the full estate.
Do married couples pay inheritance tax?
Transfers between married couples and civil partners are completely IHT-exempt regardless of amount. When the first spouse dies their unused nil-rate band transfers to the surviving spouse. This means the survivor can have a combined nil-rate band of £650000 plus £350000 residence nil-rate = £1 million. This effectively means most married couples estates under £1 million pay zero IHT.
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Last updated: 24 March 2026