Use our free Inheritance Tax Calculator to estimate potential IHT liability on an estate in the UK. Factor in the total estate value, gifts made, residence nil-rate band, and charitable donations to understand your potential tax due. Essential for estate planning and understanding probate implications.
Formula:
Inheritance Tax (IHT) in the UK is primarily calculated by:
- Determining the gross value of the estate.
- Subtracting any applicable Nil-Rate Bands (NRB), which currently stands at £325,000. Gifts made within 7 years of death can reduce this.
- Applying the Residence Nil-Rate Band (RNRB), up to £175,000, if a residence is passed to direct descendants and the estate qualifies.
- The remaining amount is the taxable estate.
- IHT is charged at a rate of 40% on the taxable estate.
- This rate can be reduced to 36% if 10% or more of the net estate is left to charity.