Inheritance tax calculator
Summary
| Total assets | £2,000,000 |
|---|---|
| Total liabilities | -£120,000 |
| Estate value Everything you own minus everything you owe. | £1,880,000 |
| Amount to spouse/civil partner | -£750,000 |
|---|---|
| Amount to charity | -£50,000 |
| Tax-free allowance | -£500,000 |
| Amount subject to Inheritance Tax | £580,000 |
Results
How your £ estate would be divided, based on the information you’ve provided.
| Estimated Inheritance Tax due | £ |
|---|---|
| Estate value after Inheritance Tax | £ |
This calculator provides a simplified estimate based on current UK Inheritance Tax rules. It does not include complex reliefs and rules or future legislative changes. Consider seeking professional advice before making decisions.
What is Inheritance Tax?
Inheritance Tax is a tax on the estate (for example, property, money, and possessions) of someone who has passed away. In the UK, it’s currently charged at 40% on the value of the estate above the £325,000 tax-free threshold (known as the ‘nil-rate band’).
You don’t have to pay Inheritance Tax on anything left to a spouse or civil partner. And if you leave your home to your children or grandchildren in your will, your tax-free threshold can increase to £500,000. You can usually transfer any unused allowances to your spouse or civil partner, increasing their threshold.
How our Inheritance Tax calculator works
To work out your results, our calculator assumes the following:
- It uses current UK allowances: a £325,000 nil rate band and a £175,000 residence nil rate band per person.
- The residence nil rate band only applies if you leave your main home to your children or grandchildren.
- It doesn’t take complex rules into account, such as downsizing, taper relief on gifts, or any business relief or agricultural property relief.
- It assumes any life insurance held in a trust is excluded from your estate.
- Defined contribution pensions are excluded, as they aren’t currently subject to Inheritance Tax under existing legislation.
- If you’re widowed, we assume your late partner’s Inheritance Tax allowance wasn’t used, and the full amount can be transferred to your own allowance.
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If you’re not leaving your home to direct descendants, we assume your main home goes to your spouse/civil partner.
Frequently asked questions about Inheritance Tax
How much can you gift tax-free?
You can gift up to £3,000 a year tax-free to loved ones. If you don’t use the full amount, you can carry the remaining amount to the next tax year (but only for one year). The small gift allowance also lets you gift up to £250 per person a year to as many people as you like, without paying tax.
You can also give any amount without paying Inheritance Tax, as long as you live for seven years after making the gift. This is known as the ‘seven-year rule.’
Does Inheritance Tax include property?
Yes, HMRC charges Inheritance Tax on the value of your whole estate, including any property you pass on to loved ones.
Is Inheritance Tax per person?
HMRC charges Inheritance Tax on your estate, not on the amount you gift to each person or the person inheriting money. The £325,000 tax-free threshold applies to the total value of your property, money, and possessions. Each recipient does not get their own £325,000 allowance.
Who pays Inheritance Tax?
The person dealing with the estate pays Inheritance Tax to HMRC before any gifts are distributed. It’s not up to those who receive gifts to declare or pay Inheritance Tax.
The executor of the estate usually pays Inheritance Tax before distributing assets. But if you received a gift within seven years of the person’s death and the estate can’t cover the tax, you may be responsible for paying it.
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