UK Inheritance Tax Calculator for Expats

What this IHT calculator does and who it's for

This tool estimates the UK Inheritance Tax (IHT) that could be due on your estate — the total of your property, investments, cash, business interests and other assets, less debts — once the tax-free thresholds and the main reliefs have been applied. It is built with internationally mobile families and expats in mind, because the way your worldwide estate is taxed now turns on your UK residence history rather than the older idea of domicile. If you have moved abroad, are planning to return, or hold UK assets from overseas, the calculator lets you model your position quickly before deciding whether to take formal advice. It sits alongside the rest of our financial tools and our estate planning service.

How the calculator works

The tool follows the same order HMRC uses. You tell it your residence position, marital status, total estate value, any gifts made in the last seven years, whether business or agricultural relief applies, whether a main residence passes to direct descendants, and any life assurance written in trust. It then works through the calculation in stages:

• Your thresholds. Everyone has a nil-rate band (NRB) of £325,000, frozen until at least April 2031. If you are widowed, the tool assumes the unused NRB of a late spouse is transferred, potentially doubling it. Where a main residence passes to direct descendants, it adds the Residence Nil-Rate Band (RNRB) of £175,000 — and a second RNRB for a widowed estate — so a couple can reach a combined threshold of up to £1 million.
• Reliefs. Life assurance written in trust is removed from the estate. Business Property Relief or Agricultural Property Relief is applied at 50% or 100% to the qualifying asset value you enter — not to your whole estate — reflecting how these reliefs really operate.
• Gifts within seven years. Any lifetime gifts are settled first and use up the nil-rate band before the death estate, with taper relief reducing the tax on older gifts (see below).
• The charge. Whatever estate remains above the surviving threshold is taxed at 40% — or 36% if at least 10% of the net estate is left to charity. Total IHT is the tax on failed gifts plus the tax on the death estate.

The seven-year gift rule and taper relief

Gifts you make are Potentially Exempt Transfers: give the money away and survive seven years and it falls out of your estate completely. Die sooner and the gift is dragged back in. The calculator splits your gifts into those made within the last three years and those made three to seven years ago, applies the nil-rate band to them oldest-first, and taxes only the excess. For gifts in the 3–7 year window it then applies taper relief, which cuts the tax (not the gift's value) on a sliding scale. To keep the tool approachable it uses a single simplified taper rate rather than the full 20%/40%/60%/80% bands, so treat the gift figure as indicative and read our detailed guide to gifts and the seven-year rule for the precise position.

Residence status, the home allowance and pensions from 2027

Your residence position drives how much is in scope. A long-term UK resident — broadly, UK resident for at least 10 of the previous 20 tax years — is taxed on their worldwide estate; others are generally only within scope on UK-sited assets. If you are unsure which side of the line you fall, the UK domicile and residence test is a useful companion. The RNRB adds a valuable extra band for a family home, but it tapers away for larger estates over £2 million, and it is only available where the residence passes to descendants — which is why the calculator asks. Finally, from 6 April 2027 most unused pension funds are due to be brought into the estate; the tool leaves pensions out by default and lets you tick a box to include a pot and preview the impact.

Reading your result — a worked example

Suppose a single, long-term UK resident has an estate of £800,000 including a home left to their children, with no lifetime gifts and no business relief. The NRB of £325,000 and the RNRB of £175,000 give a total threshold of £500,000. The estate above that is £300,000, taxed at 40%, so the estimated IHT is £120,000 — around 15% of the estate. Now change one input: if that same person were widowed and had inherited a late spouse's unused bands, the threshold would rise toward £1 million and the £800,000 estate would fall below it, wiping out the charge. The results panel breaks out each line — total estate, the reliefs, the NRB and RNRB, tax on any gifts, and the final bill — so you can see exactly what is driving the number, and it shows an indicative whole-of-life premium as a rough sense of the cost of insuring the liability.

Why it matters and what to do next

An IHT bill is normally payable within six months of death, and the executor must usually pay it before obtaining probate — often before any assets can be sold — so knowing the likely figure in advance is what makes planning possible. The levers this calculator exposes are the same ones planning uses: a structured gifting programme, spending or restructuring pension wealth ahead of 2027, qualifying business and agricultural assets, charitable legacies to secure the 36% rate, and life cover written in trust so a policy pays the tax rather than the estate. A whole-of-life policy in trust is a common way to meet the bill without forcing a sale, and because a property disposal can trigger capital gains at the same time it is worth sanity-checking with our CGT calculator. Use this estimate to size the exposure, then speak to an adviser to turn it into a plan.