IHT Threshold Calculator
Every estate has a tax-free threshold before inheritance tax applies, built from the nil-rate band, the residence nil-rate band, and any unused allowance transferred from a late spouse or civil partner. This calculator works out your combined threshold and the IHT due above it.
IHT Threshold Calculator
Every estate has a tax-free threshold before inheritance tax applies, built from the nil-rate band, the residence nil-rate band, and any unused allowance transferred from a late spouse or civil partner. This calculator works out your combined threshold and the IHT due above it.
The residence nil-rate band only applies where a home (or its sale proceeds) passes to children, grandchildren or other direct descendants, and it tapers away by £1 for every £2 the estate sits over £2,000,000.
Confirm your figure with a probate specialist
Estimates get you close. A specialist confirms your exact inheritance tax position, what reliefs and nil-rate bands apply, and the quickest route to grant of probate. No obligation, and we reply within one working day.
How the inheritance tax threshold is built up
Every estate starts with the standard nil-rate band of £325,000, frozen at that level. On top of this, the residence nil-rate band adds a further £175,000 where a home, or the proceeds of one, passes to children, grandchildren or other direct descendants. Together these give a single person's estate a threshold of up to £500,000 before inheritance tax applies at 40% on the excess.
The residence nil-rate band tapers away for larger estates, reducing by £1 for every £2 the total estate sits over £2,000,000, so it disappears entirely once the estate reaches £2,350,000. Married couples and civil partners can transfer any unused nil-rate band and residence nil-rate band from the first death to the survivor's estate, which can raise a combined estate's threshold to £1,000,000 or more.
Where at least 10% of the net estate (calculated on a defined baseline) is left to charity, the rate on the taxable portion falls from 40% to 36%. Working out the correct threshold, especially where there has been a previous marriage, a second death, or downsizing from a larger home, is one of the most common areas where estates either overpay or under-claim, so it is worth checking your figures with a specialist.
Frequently asked questions
Can I use both the nil-rate band and residence nil-rate band?
Yes, they stack. A single estate with a home passing to direct descendants gets the full £325,000 nil-rate band plus £175,000 residence nil-rate band, a combined £500,000 threshold, before any transferred allowance from a late spouse.
What if the home was sold before death, for example to move into care?
The residence nil-rate band can still be available under the 'downsizing' rules, provided the deceased owned a qualifying home at some point after 8 July 2015 and assets of equivalent value pass to direct descendants. This is a more complex calculation and worth getting checked.
Does leaving everything to my spouse avoid inheritance tax completely?
Transfers between UK-domiciled spouses and civil partners are exempt from inheritance tax regardless of amount. Tax becomes due when the estate eventually passes to non-exempt beneficiaries, typically on the second death, at which point both the transferred and the survivor's own thresholds apply.
How does the residence nil-rate band taper actually work?
For every £2 an estate's value sits above £2,000,000, £1 of residence nil-rate band is lost. At £2,350,000 the full £175,000 has gone. This is based on the value of the estate before reliefs and exemptions, so lifetime gifting can sometimes bring an estate back under the taper threshold.
What counts towards the 10% charity threshold for the reduced 36% rate?
The 10% test is calculated on a defined 'baseline amount', broadly the estate after deducting reliefs, exemptions and the nil-rate band, not simply 10% of the gross estate. Getting this calculation right usually needs professional input.
Want to be sure of your position?
A calculator gives you the shape of the answer. We confirm your exact figure and the reliefs that apply to you. Tell us about your situation for a no-obligation review.