What is the UK Inheritance Tax threshold for 2024/2025 and 2025/2026?

Every individual has a tax-free Nil-Rate Band (NRB) of £325,000. In addition, an extra Residence Nil-Rate Band (RNRB) of up to £175,000 applies when leaving a qualifying main home to direct descendants (children or grandchildren). Married couples and civil partners can combine their allowances, creating a maximum tax-free threshold of £1,000,000.

How does the Residence Nil-Rate Band (RNRB) £2 million taper work?

If the net value of an estate exceeds £2,000,000, the Residence Nil-Rate Band is reduced by £1 for every £2 of value above £2,000,000. For an individual with a £175,000 allowance, the RNRB is completely eliminated once the estate reaches £2,350,000 (or £2,700,000 for couples with 100% transferred RNRB).

What is the 7-year gift rule for UK Inheritance Tax?

Gifts made to individuals during your lifetime are known as Potentially Exempt Transfers (PETs). If you survive 7 full years after making the gift, it is 100% exempt from Inheritance Tax. If you die within 7 years and the gifts exceed your £325k allowance, taper relief reduces the tax: 0-3 years (40%), 3-4 years (32%), 4-5 years (24%), 5-6 years (16%), and 6-7 years (8%).

HMRC 2025/2026 Live £1M Spousal Transfer 100% Private (Client-Side)

UK Inheritance Tax (IHT) Calculator

Q: How do charitable gifts reduce Inheritance Tax from 40% to 36%?

Under HMRC rules, if you leave at least 10% of the baseline net value of your estate (after deducting debts and the basic nil-rate band) to registered charities, the standard Inheritance Tax rate applied to the remaining taxable estate is reduced from 40% to 36%.

Calculate your estate’s potential UK Inheritance Tax liability, available Nil-Rate Bands (£325,000 NRB + £175,000 RNRB), married couple allowance transfers (up to £1,000,000), £2M estate tapering, and 7-year gift taper relief under current HMRC statutory rules.

Quick Scenarios:

Marital Status & Allowances

Max Allowance: £500,000

Marital / Partnership Status

Surviving spouses can claim up to 100% of an unused deceased spouse's allowance.

Passing Main Home to Descendants?

Required to unlock the £175,000 Residence Nil-Rate Band (RNRB).

Basic NRB: £325,000

Residence RNRB: £175,000

Total Nil-Rate Allowance: £500,000

Estate Assets & Liabilities

HMRC Valuation

Main Residential Home (£)

Open market value of qualifying UK home

Other Assets & Investments (£)

Savings, shares, buy-to-lets, cars, jewelry

Mortgages, Debts & Funeral Costs (£)

Outstanding liabilities deducted before tax

Gift to Registered Charity (£) 10% = 36% Rate

100% exempt from IHT. 10%+ cuts estate rate to 36%.

Net Estate Value (Assets minus Debts): £680,000

7-Year Gift Rule (PETs) Simulator

Taper Relief

Under HMRC Potentially Exempt Transfer (PET) rules, gifts given within 7 years of death may be subject to Inheritance Tax with sliding taper relief if they exceed available annual gift exemptions:

Lifetime Gift Amount (£)

Time Elapsed Since Gift Given

Gift Tax Liability (after taper): £0

HMRC Liability

Total Inheritance Tax

40% Standard Rate

£72,000

Effective Tax Rate: 10.59%

•

To Beneficiaries: £608,000

Gross Estate Assets: £700,000

Less Debts & Liabilities: -£20,000

Less Charitable Bequest: -£0

Total Nil-Rate Deductions: -£500,000

Net Taxable Estate: £180,000

Inheritance Tax Due: £72,000

Frequently Asked Questions

Clear answers regarding UK Inheritance Tax rates, spousal transfers, and estate planning.

How do married couples get a £1,000,000 Inheritance Tax allowance? ▼

When one spouse or civil partner dies, any assets passed to the surviving spouse are 100% exempt from IHT. In addition, 100% of their unused £325,000 Nil-Rate Band and £175,000 Residence Nil-Rate Band transfers to the surviving spouse. On the second spouse's death, the executors can claim two NRBs (£650,000) plus two RNRBs (£350,000), giving a combined tax-free allowance of £1,000,000.

What qualifies as a direct descendant for the Residence Nil-Rate Band (RNRB)? ▼

To claim the £175,000 RNRB, the property must be left to direct descendants: children, grandchildren, great-grandchildren, step-children, adopted children, foster children, or spouses/civil partners of direct descendants. Leaving your home to brothers, sisters, nieces, nephews, or friends does NOT qualify for the RNRB.

How does the 10% charitable gift reduce IHT from 40% to 36%? ▼

If you leave at least 10% of your baseline net estate (after deducting debts and the basic nil-rate band) to registered charities, HMRC lowers the IHT rate on the remainder of your taxable estate from 40% to 36%. In many cases, this significantly reduces the net cost of making a substantial charitable donation.

When must UK Inheritance Tax be paid to HMRC? ▼

Inheritance Tax must be paid by the end of the 6th month after the person died (e.g. if the person died in January, tax is due by 31 July). After 6 months, HMRC charges interest on unpaid amounts. Tax on property can usually be paid in annual instalments over 10 years.

Is my data private when calculating my estate tax here? ▼

Yes, 100%. FreeCalcSuite runs completely inside your browser's local RAM. No personal financial details, property values, or estate figures are ever transmitted across the internet to any server.