Tools · Tax
UK Inheritance Tax Calculator for Expats
Estimate your potential UK Inheritance Tax liability — and understand how the nil-rate band, RNRB, taper relief, and the new pension rules affect your estate.
Estimated IHT payable
£120,000
15% of total estate · at 40% rate
Rates and thresholds are 2026/27. NRB is £325,000 and RNRB is £175,000. This calculator provides indicative estimates — it does not account for all reliefs, trusts, conditional exemptions, or complex estate structures. From 6 April 2026, 100% business and agricultural property relief is capped at £2.5m per estate (the £1m originally announced in October 2024 was raised to £2.5m in December 2025), with 50% relief above that — which this simplified BPR/APR estimate does not apply. Taper relief calculation is simplified. This is not financial or legal advice. Seek professional guidance for estate planning.
UK Inheritance Tax: The Key Rules
Inheritance Tax (IHT) is charged at 40% on the taxable value of an estate above the nil-rate band thresholds. Where at least 10% of the net estate is left to charity, the rate reduces to 36%. IHT is normally payable within six months of the date of death, and the executor is responsible for paying it before obtaining probate.
Nil-Rate Band and Residence Nil-Rate Band
Every individual has a standard nil-rate band of £325,000, frozen until at least April 2031. Married couples and civil partners can transfer any unused NRB to the surviving spouse, potentially doubling the threshold to £650,000.
An additional Residence Nil-Rate Band (RNRB) of £175,000 is available where a main residence passes to direct descendants (children, stepchildren, grandchildren, etc.). This too can be transferred to a surviving spouse. The combined maximum threshold for a couple is therefore £1 million.
Note: the RNRB tapers for estates over £2 million, reducing by £1 for every £2 above the threshold.
Taper Relief on Gifts
Gifts made within 7 years of death are potentially chargeable to IHT. However, taper relief reduces the charge where gifts were made between 3 and 7 years before death. Gifts made more than 7 years before death fall outside the estate entirely.
There are also annual exemptions and normal expenditure out of income exemptions that can shelter smaller regular gifts entirely.
Business and Agricultural Property Relief
Business Property Relief (BPR) and Agricultural Property Relief (APR) can reduce the value of qualifying business or farming assets by either 50% or 100%, significantly reducing IHT on family businesses and farms. Broadly, unlisted shares and sole trader businesses qualify for 100% relief after 2 years of ownership. Note that from 6 April 2026, 100% relief is capped at a combined £2.5 million of qualifying business and agricultural property per estate (transferable between spouses), with the balance above that limit qualifying for 50% relief; AIM-listed shares qualify for 50% relief only.
IHT and Your Residence Status
From 6 April 2025, UK IHT moved from a domicile basis to a residence basis, and the concepts of domicile and "deemed domicile" were abolished for tax purposes. A "long-term resident" — broadly someone UK resident for at least 10 of the previous 20 tax years — is now within scope of UK IHT on their worldwide estate. Others are generally only subject to UK IHT on UK-sited assets, such as UK property, UK bank accounts, and UK investments. The former "15 of 20" deemed-domicile test no longer applies — take specialist advice on your position.
Pensions and IHT from 2027
Currently, unused defined contribution pension pots can generally be passed outside your estate entirely. From 6 April 2027, under the Finance Act 2026 (which received Royal Assent on 18 March 2026), most unspent pension funds and death benefits will be included in the IHT calculation, with personal representatives liable for the tax. This is a significant change that affects many people who have deliberately retained pension wealth as a tax-efficient inheritance vehicle. Planning opportunities exist — speak with our advisers.
Frequently Asked Questions
What is the IHT nil-rate band in 2026/27?
The standard nil-rate band (NRB) is £325,000 in 2026/27 and has been frozen at this level since 2009 (the freeze currently runs to April 2031). In addition, each person who owns a main residence and passes it to direct descendants can claim the Residence Nil-Rate Band (RNRB) of £175,000, making the total potential threshold £500,000 per person or up to £1 million for a married couple/civil partnership.
Do non-UK domiciled individuals pay UK inheritance tax?
From 6 April 2025, UK IHT is based on residence rather than domicile. The concept of domicile (and "deemed domicile") was abolished for tax purposes. Broadly, a "long-term resident" — someone who has been UK resident for at least 10 of the previous 20 tax years — is now within scope of UK IHT on their worldwide estate, while others are generally only subject to UK IHT on UK-sited assets. The previous "15 of 20" deemed-domicile test and the remittance basis no longer apply. Seek professional advice on your specific position.
What is taper relief on gifts?
If you make a gift and die within 7 years, IHT may still be due on it. However, if the gift was made between 3 and 7 years before death, taper relief reduces the IHT charge: 3-4 years = 20% reduction; 4-5 years = 40%; 5-6 years = 60%; 6-7 years = 80%. Gifts made more than 7 years before death are fully exempt (Potentially Exempt Transfers, or PETs).
Will my pension be subject to IHT from 2027?
Yes. Under the Finance Act 2026 (Royal Assent 18 March 2026), most unused pension funds and death benefits will be brought into the IHT estate from 6 April 2027, with personal representatives liable for any IHT due. Currently, defined contribution pension pots can generally be passed on free of IHT. This is a significant change that will affect retirement and estate planning — particularly for those with large pension pots who planned to leave them as a tax-efficient inheritance.
Talk to an estate planning specialist
Our advisers can help you understand your IHT exposure and explore trusts, gifting, and international structures to protect your estate.