How Does the IHT Calculator Work?
The IHT calculator applies current UK Inheritance Tax rules to estimate how much tax may be owed on an estate. It calculates the nil-rate band (£325,000), residence nil-rate band (up to £175,000), and applies the 40% standard rate (or 36% reduced rate if at least 10% is left to charity).
Key features:
- ✅ Nil-rate band (NRB) — £325,000 per person
- ✅ Residence nil-rate band (RNRB) — up to £175,000
- ✅ Spouse transfer — combine unused allowances
- ✅ 7-year gift rule — add gifts back to the estate
- ✅ Charity reduction — 40% → 36% if 10%+ left to charity
All calculations follow HM Revenue & Customs (HMRC) guidelines for the 2025/26 tax year.
What Is the 7-Year Gift Rule?
Gifts made within 7 years of death are added back into the estate for Inheritance Tax purposes. If the total estate (including gifts) exceeds the nil-rate band, tax is charged at 40% on the excess.
Taper relief reduces the tax on gifts if the donor survived at least 3 years after making the gift:
| Years Between Gift and Death | Tax Reduction |
|---|---|
| 0 – 3 years | 0% |
| 3 – 4 years | 20% |
| 4 – 5 years | 40% |
| 5 – 6 years | 60% |
| 6 – 7 years | 80% |
| 7+ years | 100% (exempt) |
The calculator applies taper relief automatically based on the gift amount entered.
Who Benefits from the IHT Calculator?
This IHT tax estimator is designed for:
- UK residents planning their estate and inheritance tax liability
- Families with property and savings needing to understand IHT exposure
- Executors estimating tax during probate
- Advisors running client scenarios for estate planning
- Anyone wanting to understand how charity gifts or spouse transfers affect IHT
The tool handles RNRB, spouse transfer, 7-year gifts, charity reduction, and more — all in one place.
Frequently Asked Questions
What is Inheritance Tax (IHT) in the UK?
Inheritance Tax is a tax on the estate of someone who has died. In the UK, it is charged at 40% on the portion above the nil-rate band (£325,000 in 2025/26).
What is the nil-rate band?
The nil-rate band (NRB) is the threshold below which no IHT is payable. For 2025/26, the standard NRB is £325,000 per person.
What is the residence nil-rate band?
The RNRB is an additional allowance of up to £175,000 (2025/26) if you leave your main residence to direct descendants.
Can I transfer unused nil-rate band to my spouse?
Yes — unused NRB and RNRB can be transferred to a surviving spouse or civil partner, potentially doubling the allowances.
How do gifts affect Inheritance Tax?
Gifts made within 7 years of death are added back to the estate. They are taxed at 40% above the NRB, with taper relief reducing tax if gifted 3-7 years before death.
Does leaving money to charity reduce IHT?
Yes — leaving at least 10% of your estate to charity reduces the IHT rate from 40% to 36% on the taxable portion.
Is my data stored anywhere?
No. All calculations run locally in your browser. No data is sent to any server.