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Inheritance Tax Explained

Inheritance Tax is charged on the estate of someone who has died, at 40% above the available tax-free thresholds. Most estates pay nothing, but rising property values mean more are affected.

Tax year 2026/27 · Estimates, not personal tax advice

The tax-free bands

Everyone has a £325,000 nil-rate band. A residence nil-rate band of up to £175,000 is added when a home is left to direct descendants. Unused bands pass to a surviving spouse, so a couple can leave up to £1 million tax-free.

Gifts and the seven-year rule

Gifts made more than seven years before death are normally outside the estate. Gifts made within three to seven years get taper relief on any tax due. Small gifts, wedding gifts and regular gifts from surplus income have their own exemptions.

Upcoming changes

Unused pension funds are due to come into the scope of Inheritance Tax from April 2027, and business and agricultural relief are being restricted from April 2026.

Planning is not estate administration

An early estimate can help organise questions, but it is not a distribution schedule. Debts, administration and the treatment of particular assets need consideration before allocating amounts to beneficiaries.

Try it with your own numbers

Estimate UK Inheritance Tax on an estate using the £325,000 nil-rate band, the residence nil-rate band, transfers between spouses and the charity rate.

Open Inheritance Tax Calculator

Frequently asked questions

When is Inheritance Tax paid?

By the end of the sixth month after death, although tax on property can often be paid in instalments.

Check it on GOV.UK: Inheritance Tax (opens GOV.UK in a new tab)

Sources

Tax year 2026/27. Check these official sources for current rules and deadlines.

Related calculators

  • Inheritance Tax Calculator — Estimate UK Inheritance Tax on an estate using the £325,000 nil-rate band, the residence nil-rate band, transfers between spouses and the charity rate.

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