Calculate Your Inheritance Tax – IHT Calculator

Please be advised that the information in this article regarding QNUPS and IHT is no longer accurate due to the recent changes announced in the UK Budget. Starting in April 2025, the regulations will have significant implications that may affect your understanding of these topics. We encourage you to stay informed and consult with a Soteria Trusts expert to navigate these changes effectively.

Inheritance tax (IHT) is paid on what you leave behind to your heirs, who could pay as much as 40% tax on what they inherit. Estimate the value of your estate and how much inheritance tax may be due on your estate when you die with our IHT calculator below.

Related: What is an estate for IHT purposes?

What is IHT? 

Every UK National or those non-Nationals with UK assets can leave up to £325,000 of their total estate free of Inheritance Tax (the nil-rate band). If you are married or in a civil partnership when you pass away, then all of your estate will pass to the surviving spouse/partner completely free of tax. Following the death of either one of you, the deceased’s nil rate band is added to that of the survivor to provide a combined total IHT free nil rate band of £650,000 when the second one of you passes away.

Related: Inheritance Tax Thresholds & Rates

What’s an estate? A person’s estate is the sum of their bank account deposits, any savings & investments, the market value of the house they live in, and all other assets they own at the date of death, minus any liabilities they may have such as credit card debt, personal loans or mortgages.

There’s an additional inheritance tax allowance that can now be added to the NRB – the residence nil-rate band (RNRB) which can only be availed of by direct descendants who inherit the main residence of the deceased. Please note that the rules surrounding the RNRB are complex and don’t benefit everybody. For this reason, our IHT calculator does not include the additional £175,000 residence nil-rate band that is available to each person subject to their status.  

IHT Calculator 

By filling in the boxes below, our IHT calculator will estimate the taxable estate and therefore, give you an indication of the potential inheritance tax due on your estate if you were to pass away today. This IHT calculator has been prepared in good faith and is intended to give a general guide. Keep in mind that specific circumstances that are outside of the scope of this calculator may result in different levels of inheritance tax being due. Also bear in mind that legislation may change in the future.

Please also note that this calculator doesn’t account for any gifts made or trusts established, which could lead to a higher or lower inheritance tax bill. For a full explanation and calculation of your taxable estate, please contact one of our IHT advisers for a free consultation. 

Who pays IHT?

Who pays IHT can depend on your domicile at the point of death but generally speaking it’s the estate of the deceased so long as it has UK-sited assets within it. IHT is not specific to nationality or residence, at the most basic level IHT is paid on the value of UK assets over the NRB and is extended to worldwide assets if the individual was considered the UK domiciled at the point of death. 

The reality is that all UK assets are assessed for IHT following the death of the owner. Before the heirs & beneficiaries to your estate can inherit, the IHT must be paid, the timeline given by HMRC to do so is by the end of the sixth month following your death. If it hasn’t been paid, then interest will start to accrue and penalties will be applied. An inheritance tax reference number from HMRC is needed first and should be applied for at least three weeks before a payment needs to be made. 

Inheritance tax due on money or possessions passed on following your death is normally paid from your estate, by the estate administrator, only after the tax has been paid can your beneficiaries get access to it. If for any reason the estate or the intended beneficiaries are not able to pay in time, then the IHT due will be taken from the estate before distribution is allowed, for example, from the proceeds of the sale of a property, or other assets that can be easily liquidated.

Can I avoid leaving a tax burden to my loved ones?

There are legitimate strategies and solutions which can help families mitigate IHT in full.  One such strategy which isn’t very practical and not suitable for those who want to provide a legacy for their loved ones is to spend all of their wealth or at least leave the total value of the estate below £325,000. Other more sensible and practical approaches include giving gifts, establishing a Business Relief Account, or opening a specific, HMRC-approved overseas pension (which can shield investments, including property from IHT and CGT). 

For more information, download Soteria’s Guide to IHT Planning or get in touch with our team today!