Inheritance Tax Calculator — Home, Investments, Business Assets & Gifts (2026/27)
Work out Inheritance Tax on your whole estate — home, rentals, savings, shares, pensions, business assets, gifts and reliefs — with 2026/27 rates.
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Most Inheritance Tax calculators only handle a home and a bank balance. A real estate is messier: a main residence, maybe a rental or two, savings, some shares, a pension that will or won’t count depending on the date, and perhaps a genuine business or a working farm sitting alongside all of it — each taxed, relieved or exempted under a different rule. This calculator takes the whole mix in one form and works out the taxable estate, the Inheritance Tax due, the effective rate, and — separately — what each relief you qualify for actually saved.
What counts in your estate, and what doesn’t
Your home, other property, savings and ordinary shares are all taxed at full value with no special relief. Rental property in particular gets no Business Property Relief — HMRC’s manual (IHTM25278) is explicit that letting is investment, not trading. Pensions are different again: unused pension funds and death benefits only join the estate for Inheritance Tax on deaths on or after 6 April 2027, under the measure gov.uk confirmed is now law — leave the toggle on “before” and this calculator leaves them out, exactly as today’s rules require.
The £2.5 million business and agricultural relief allowance
From 6 April 2026, a genuine trading business or agricultural holding gets 100% relief on the first £2,500,000 of combined qualifying value, and 50% relief above that — gov.uk’s reform policy paper is explicit on both the amount and the split. You may have seen “£1 million” quoted for this allowance elsewhere; that figure belongs to something else entirely — the nil-rate band and residence nil-rate band a married couple can use together (see the FAQ below) — not to business or agricultural relief, which this calculator applies at the verified £2.5m figure. A rental property portfolio, however large, does not qualify for this relief at any level; it has to be a business or agricultural asset in its own right.
Using both spouses’ allowances
Everything left to a spouse or civil partner passes free of Inheritance Tax, and any nil-rate band, residence nil-rate band and, since a Budget 2025 update, unused £2.5m business/agricultural allowance they didn’t use can transfer to you — even if they died before 6 April 2026. Selecting “full transfer” above doubles all three figures the calculator uses, matching the approach this site’s existing property-only IHT calculator already takes for the ordinary bands.
Lifetime gifts: the 7-year taper
A gift is a potentially exempt transfer — it drops out of your estate entirely if you survive 7 years. Gifts made within 7 years of death use the nil-rate band first, oldest gift first, exactly as HMRC applies it; only the amount above the band left is taxed, with taper relief cutting the tax (not the gift) the longer you survived after making it. Enter up to two gifts with their dates and the calculator works the years-since-gift out itself.
Leaving 10% to charity
Leaving at least 10% of the net estate to charity drops the rate on the whole taxable estate from 40% to 36%. The saving shown below isolates just that rate cut — it doesn’t assume the charitable gift itself, which reduces what the family receives regardless of the tax rate.
What this estimate assumes
- The residence nil-rate band tapers by £1 for every £2 the net estate (before business/agricultural relief is deducted) exceeds £2,000,000 — a very large business or farm can taper the residence band to nothing even though the relief itself protects most of the tax bill.
- Gift amounts should already be net of the £3,000 yearly and £250 small-gift exemptions, the same assumption as the site’s other gift calculators.
- “What each relief saved” compares your actual bill against the same estate without that one relief, at your own tax rate — it isolates each relief but doesn’t replace a solicitor’s or accountant’s figures for a real estate, especially one with trusts or assets outside the UK.
If gifting a rental property is on the table instead of holding it, the gifting-to-children guide covers the Capital Gains Tax charge that comes with it; the Inheritance Tax on rental property guide and the threshold-by-band breakdown go deeper on any one figure used here, and the pension changes guide covers the 2027 pension rule in full.
Nil-rate band, residence nil-rate band, the 40%/36% rates, the 7-year gift taper table and the 6 April 2027 pensions date: gov.uk (Inheritance Tax; IHT — gifts; RNRB guidance; unused pension funds and death benefits), quoted in research/2026-09-04/LTL-FACTS-PACK-2.md, re-checked 4 Sep 2026. Business/agricultural relief allowance: gov.uk, “Agricultural Property Relief and Business Property Relief changes”, read in full 13 Sep 2026. General information, not advice — a real estate with trusts, businesses or overseas assets needs a solicitor or accountant.
Asked constantly
Up to £1,000,000 tax-free, if the home passes to children or grandchildren: each spouse's £325,000 nil-rate band plus £175,000 residence nil-rate band, both fully transferable to the second spouse to die. That figure is often rounded to "£1 million" — it has nothing to do with the separate £2.5 million business/agricultural relief allowance below.
No. Rental property, listed shares, savings and cash all sit in the estate at full value with no relief beyond the ordinary nil-rate bands. Only a genuine trading business or agricultural holding qualifies for Business or Agricultural Property Relief.
From 6 April 2026, the first £2,500,000 of combined qualifying business and agricultural property gets 100% relief; anything above that gets 50%. Before that date, qualifying assets generally got 100% relief with no cap. A commonly quoted "£1 million" figure for this allowance is incorrect — that number is the couple's combined nil-rate and residence nil-rate bands, a different relief entirely.
Only for deaths on or after 6 April 2027. Before that date, most unused pension funds and death benefits stay outside the estate. This calculator only adds the pension figure you enter if you tell it the death falls on or after that date.
A gift becomes fully exempt once you survive it by 7 years. Inside that window, gifts use your nil-rate band first (oldest gift first); anything above the band is taxed, with taper relief lowering the tax — not the gift — the longer you survived: 100% of the death rate within 3 years, then stepping down through years 3-7.
It cuts the rate on your whole taxable estate from 40% to 36% — a straightforward rate cut on the tax bill, separate from the value of the gift itself, which still leaves the estate and reduces what the family receives.
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Disclosure: we make and sell the Tax Pack — this is our own product, not a paid recommendation. It does not file anything with HMRC and it is not tax advice; filing goes through you, your accountant or software on HMRC’s compatible-software list.