Calculate UK inheritance tax on estates with nil-rate band, residence allowance, and exemptions
A UK inheritance tax (IHT) calculator computes tax liability on estates over £325,000 (nil-rate band), applying the 40% IHT rate to amounts above thresholds, accounting for additional residence nil-rate band (£175,000 when passing home to direct descendants), and calculating potential reliefs including spouse exemption, charitable gifts, and business/agricultural property relief. Shows tax due, available planning strategies to reduce IHT, and how gifts made before death (potentially exempt transfers) affect calculations based on 7-year taper relief. Essential for estate planning, understanding HMRC requirements, and ensuring heirs receive maximum inheritance rather than losing hundreds of thousands to tax.
Avoid your family losing 40% of your estate to HMRC by understanding IHT thresholds and planning strategies well in advance—many estates pay hundreds of thousands unnecessarily through lack of planning. Maximize nil-rate bands by ensuring spouses transfer unused allowances (effectively £650,000 threshold for married couples), and claim residence nil-rate band when applicable (potentially £1M total threshold for couples passing home to children). Understand 7-year rule for gifting—gifts more than 7 years before death are IHT-free, while those within 7 years may be taxable on sliding scale. Calculate whether lifetime gifting, trusts, life insurance policies, or pension planning could save your beneficiaries significant tax. Ensure children inheriting family homes benefit from full £500,000 threshold (£325,000 + £175,000 RNRB) rather than losing it through poor planning.
Enter total estate value (property, savings, investments, possessions minus debts), marital status (spouses exempt from IHT, allowing threshold transfer), whether property will pass to direct descendants (children/grandchildren for RNRB), and any gifts made in last 7 years. Results show IHT liability at 40% on amounts exceeding combined nil-rate and residence nil-rate bands. For married couples, calculator shows benefit of transferring unused nil-rate band from first death (effectively doubling threshold to £650,000-£1M depending on RNRB eligibility). Review strategies like gifting excess wealth earlier (7-year clock), setting up trusts, using pension death benefits (IHT-free), or life insurance policies written in trust to cover IHT bill without reducing estate value.
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