UK Inheritance Tax Calculator 2025/26 — NRB, RNRB & Taper
Inheritance Tax (IHT) is charged at 40% on the portion of a UK estate that exceeds the available tax-free allowances. For 2025/26, every estate benefits from the Nil-Rate Band (NRB) of £325,000, which has been frozen since 2009 and will remain frozen until at least April 2028. If you pass your main home to children or grandchildren, an additional Residence Nil-Rate Band (RNRB) of £175,000 may apply — bringing the total threshold to £500,000 for a single person, or up to £1,000,000 for a surviving spouse who inherits unused allowances. Gifting at least 10% of the net estate to charity drops the IHT rate from 40% to 36%. This calculator provides a straightforward estimate; for personalised estate planning, always consult a qualified solicitor or financial adviser.
Rates: 2025/26 tax year.
NRB frozen until April 2028.
| Item | Amount |
|---|---|
| Estate Total Value | £500,000.00 |
| Allowances | |
| Effective Nil-Rate Band (NRB) | £325,000.00 |
| Effective Residence NRB (RNRB) | £175,000.00 |
| Total Tax-Free Allowance | £500,000.00 |
| Tax | |
| Taxable Estate | £0.00 |
| IHT Rate Applied | 40% |
| IHT Owed | £0.00 |
| Net Amount to Beneficiaries | £500,000.00 |
Estate total value: £500,000 Less charitable gifts (0%): -£0 Net estate after charity: £500,000 Nil-Rate Band (NRB): £325,000 Effective NRB: £325,000 Residence NRB (RNRB): £175,000 Total tax-free allowance: £500,000 Taxable estate: £0 IHT rate: 40% IHT owed: £0 Net to beneficiaries: £500,000
No IHT is owed — the estate falls within the combined tax-free allowances.
This is an estimate for 2025/26. Consult a solicitor or estate planner for personalised advice.
The £325,000 Nil-Rate Band
The Nil-Rate Band is the core IHT allowance available to every UK estate, regardless of what assets are included or how they are distributed. For 2025/26 it stands at £325,000, unchanged since 6 April 2009. The Chancellor has confirmed the freeze will continue until at least April 2028. Because property and investment values have risen substantially over that period, a growing number of estates — including many that their owners never considered "wealthy" — now attract IHT.
The NRB applies first. IHT is only calculated on the amount that exceeds this threshold (and any additional RNRB, as described below). If your estate is valued at £500,000 and you have a full £325,000 NRB, only £175,000 is exposed to the 40% charge — resulting in £70,000 of IHT.
When a spouse or civil partner dies leaving their entire estate to the other, their unused NRB transfers to the survivor. A widow or widower can therefore have a combined NRB of up to £650,000 if neither spouse has used any of their allowance. This transferable NRB is expressed as a percentage (0–100%) of the standard £325,000 band.
The £175,000 Residence Nil-Rate Band
The Residence Nil-Rate Band (RNRB) is an additional allowance of £175,000 for 2025/26. It is available only when all three conditions are met:
- The deceased owned a qualifying residential property (at any point — not necessarily at death)
- The property is left to direct descendants: children, grandchildren, great-grandchildren, stepchildren, adopted children, or foster children
- The RNRB claimed does not exceed the value of the property passed
Siblings, nieces, nephews, unmarried partners, and friends do not qualify as direct descendants. Like the NRB, unused RNRB from a deceased spouse transfers to the survivor, so a couple could have a combined RNRB of up to £350,000.
Worked Example: £800,000 Estate with £500,000 Home Passing to Children
To illustrate how the allowances combine, consider a single person with an estate worth £800,000 including a house worth £500,000, which they leave entirely to their children:
Estate total value: £800,000 Charitable gifts: £0 Net estate: £800,000 Nil-Rate Band (NRB): £325,000 Residence NRB (RNRB): £175,000 (home passed to children) Total tax-free allowance: £500,000 Taxable estate: £800,000 − £500,000 = £300,000 IHT rate: 40% IHT owed: £300,000 × 40% = £120,000 Net to beneficiaries: £680,000
Without the RNRB, the taxable estate would have been £475,000 and the IHT bill £190,000 — so the RNRB saves £70,000 in this example. This underlines why ensuring the main residence passes correctly to direct descendants matters.
The £2 Million Taper — When the RNRB Is Clawed Back
High-value estates face a further complication: the RNRB tapers away once the estate exceeds £2,000,000. The reduction is £1 for every £2 above that threshold, so the RNRB reaches zero at £2,350,000 (£2m + 2 × £175,000). For couples using a transferred RNRB of £350,000, the taper starts at £2m and reaches zero at £2,700,000.
| Estate Value | Excess over £2m | RNRB Reduction | Effective RNRB (single) |
|---|---|---|---|
| £2,000,000 | £0 | £0 | £175,000 |
| £2,100,000 | £100,000 | £50,000 | £125,000 |
| £2,200,000 | £200,000 | £100,000 | £75,000 |
| £2,300,000 | £300,000 | £150,000 | £25,000 |
| £2,350,000+ | £350,000+ | £175,000 | £0 (fully tapered) |
For families with estates between £2m and £2.35m, the taper creates an effective marginal IHT rate that is substantially higher than 40% on the pounds that push the estate above £2m, because each additional pound of estate reduces the RNRB by 50p — adding 20p of extra IHT (50p × 40%). Strategies such as charitable giving, pension preservation, and lifetime gifting can help keep the estate below the taper threshold.
Spouse Transferable Allowances — Up to £1 Million Combined
Transfers between UK-domiciled spouses and civil partners are fully exempt from IHT. More importantly, any portion of the NRB or RNRB unused by the first spouse to die transfers automatically to the survivor. This means:
- If the first spouse left their entire estate to the survivor, 100% of their NRB (£325,000) and 100% of their RNRB (£175,000) transfer to the survivor
- The survivor's estate can therefore benefit from up to £650,000 in NRB and up to £350,000 in RNRB — totalling £1,000,000
- The transfer is expressed as a percentage of the standard band in force at the time of the survivor's death — so if the NRB rises before the survivor dies, the percentage increases proportionally
The transferable percentage is confirmed via a claim to HMRC, usually made at the time of probate on the survivor's estate. Executors should retain the first spouse's death certificate, grant of probate, and any relevant tax returns to support the claim.
The 10% Charitable Rate Reduction
If at least 10% of the net estate is left to a qualifying UK charity, the IHT rate on the taxable estate drops from 40% to 36%. The net estate for this calculation is broadly the estate value after deducting the NRB but before applying charity gifts — the exact rules are set out in Schedule 1A of the Inheritance Tax Act 1984 and can be complex.
In simplified terms: if your net chargeable estate (before charity) is £200,000 and you give £20,000 (10%) to charity, the remaining £180,000 is taxed at 36% rather than 40%, yielding £64,800 rather than £80,000. The charity gift costs £20,000 but the tax saving is £15,200 — so the net cost to beneficiaries of the charitable bequest is only £4,800. This makes charitable giving at the 10% threshold particularly compelling for many families.
Gifts and the 7-Year Rule
Lifetime gifts can substantially reduce an estate's IHT exposure, but the rules are strict. Gifts to individuals (other than exempt recipients such as spouses) are called Potentially Exempt Transfers (PETs). A PET becomes fully exempt only if the donor survives for 7 years after making it. If the donor dies within 7 years, taper relief reduces the IHT charge on gifts made between 3 and 7 years before death:
| Years Between Gift and Death | Taper Relief | IHT Rate on Gift |
|---|---|---|
| 0–3 years | 0% | 40% |
| 3–4 years | 20% | 32% |
| 4–5 years | 40% | 24% |
| 5–6 years | 60% | 16% |
| 6–7 years | 80% | 8% |
| 7+ years | 100% | 0% (fully exempt) |
Additionally, you can give away £3,000 per year completely free of IHT (the annual exemption), and you may carry forward one previous year's unused allowance (up to £3,000). Gifts of up to £250 per recipient per year are also exempt. Wedding or civil partnership gifts are exempt up to £5,000 from a parent, £2,500 from a grandparent, and £1,000 from anyone else. This calculator does not model gifting; for a full estate plan incorporating lifetime giving, consult a qualified estate planner or solicitor.
Frequently Asked Questions
What is the UK Inheritance Tax threshold for 2025/26?
Every UK estate benefits from the Nil-Rate Band (NRB) of £325,000. If you pass your main home to direct descendants (children, grandchildren, stepchildren, adopted or foster children), you also get the Residence Nil-Rate Band (RNRB) of £175,000, bringing the total tax-free threshold to £500,000 for an individual. The NRB has been frozen at £325,000 since 2009 and will remain frozen until at least April 2028 under current government policy.
Do married couples get a bigger Inheritance Tax allowance?
Yes — significantly so. Transfers between UK-domiciled spouses or civil partners are 100% exempt from IHT. When the first spouse dies, any unused portion of their NRB and RNRB transfers to the survivor. If the first spouse left their entire estate to the survivor (using none of their allowances), the survivor inherits 100% of the unused NRB and 100% of the unused RNRB. This means the survivor's combined threshold can be up to £650,000 in NRB plus £350,000 in RNRB — totalling £1,000,000 — before any IHT is owed on their estate.
What is the Residence Nil-Rate Band and who qualifies?
The Residence Nil-Rate Band (RNRB) is an additional £175,000 allowance (2025/26) available when you pass a qualifying residential property to direct descendants. Direct descendants include your children, grandchildren, great-grandchildren, step-children, adopted children, and foster children. The property must have been your main residence at some point (it does not have to be your residence at the date of death). If your estate is worth more than £2,000,000, the RNRB tapers away at £1 for every £2 above that threshold, disappearing entirely at £2,350,000. Partners, siblings, nieces, and nephews do not qualify as direct descendants for RNRB purposes.
When does the 10% charitable rate reduction apply?
If you leave at least 10% of your net estate to a qualifying UK charity, the IHT rate drops from 40% to 36% on the taxable portion of your estate. The "net estate" for this purpose is calculated after deducting exemptions (like the spouse exemption), reliefs, and the nil-rate bands, so the calculation can be complex. In practice, the 4 percentage-point reduction on the taxable estate means that giving to charity can cost beneficiaries very little in lost inheritance while delivering a meaningful charitable donation. HMRC publishes detailed guidance on the calculation, and your solicitor can confirm eligibility.
Can I avoid IHT by gifting assets before I die?
Gifts made more than 7 years before death are fully exempt from IHT — these are called Potentially Exempt Transfers (PETs). Gifts made within 7 years of death may still attract IHT on a sliding taper: no reduction for gifts within 3 years of death; 20% reduction for gifts 3–4 years before death; 40% reduction for 4–5 years; 60% for 5–6 years; and 80% for 6–7 years. There are also annual exemptions: you can give away £3,000 per year free of IHT (unused allowance from the previous year can also be carried forward). Small gifts of up to £250 per person per year are also exempt. This calculator does not model gifting — consult an estate planner for a full strategy.
Is IHT payable on life insurance?
Life insurance proceeds form part of your estate unless the policy is written in trust. If a policy is written in trust, the payout goes directly to the named beneficiaries and does not pass through your estate — so it is not subject to IHT. This is a common and straightforward way to ring-fence life insurance from IHT. Speak to your insurer or a financial adviser about placing an existing policy into trust; most insurers can arrange this at no cost. Once in trust the proceeds are also paid more quickly to beneficiaries, as they bypass the probate process.