How Much Inheritance Tax Will I Pay? Worked Examples for 2026

By Executr Ltd.. Rules current as at 9 October 2026. Applies UK-wide.

The honest answer is that most estates pay nothing. Around 1 in 20 deaths in the UK results in an Inheritance Tax bill — the allowances are generous enough that a couple with a home and modest savings usually passes everything on tax free. But the estates that do pay, often pay a lot, and the difference between the two frequently comes down to a single decision in a will.

This page works through three real shapes of estate, line by line, so you can see which side of the line yours falls on. If you want the answer for your own figures, the calculator does the same arithmetic in about two minutes.

The short answer

Inheritance Tax is 40% of whatever the estate is worth above the allowances available to it. The allowances are:

So the ceiling before any tax is due is £325,000 for a single person with no property going to children, £500,000 for a single person whose home does go to children, and £1,000,000 for a couple in the same position.

Two things catch people out. First, ISAs are not free of Inheritance Tax — they are tax free while you're alive and fully taxable on death. Second, above £2,000,000 the residence allowance starts being withdrawn, so a larger estate can lose it entirely.

Example 1 — a £600,000 estate

A widowed-but-not-remarried position is dealt with in example 2. Here, take someone single, divorced or never married:

• Home worth £350,000, left to two children
• Savings and investments of £250,000
• No debts, no gifts in the last seven years

The children receive £560,000. The effective rate on the whole estate is 6.7%, not 40% — a distinction worth holding onto, because the headline rate makes people assume the bill is far larger than it is.

Note that the residence allowance is capped at £175,000 even though the home is worth £350,000. It is the lower of the home's value and the allowance.

Change one thing. If that home were left to a niece rather than to the children, the residence allowance disappears entirely and the bill rises from £40,000 to £110,000. Direct descendants means children, grandchildren, step, adopted and foster children — and their spouses. Not siblings, nieces or nephews.

Example 2 — a £900,000 estate after a spouse has died

The same estate, but the person is widowed and their late husband or wife left everything to them — which is the common case, and means none of the first spouse's allowances were used.

• Home worth £500,000, left to the children
• Other assets of £400,000
• 100% of the late spouse's nil-rate band and residence nil-rate band available

Nothing to pay. The combined allowances come to £1,000,000, which comfortably covers a £900,000 estate.

This is the single biggest swing available, and it has to be claimed — it is not automatic. The executors claim the transferred bands on forms IHT402 and IHT436 within two years of the second death. Estates have paid tax they didn't owe because nobody realised a band from a death decades earlier was still available.

Example 3 — a £2.2m estate where the taper bites

Larger estates hit a rule that surprises almost everyone.

• Home worth £600,000, left to the children
• Other assets of £1,600,000
• Single, no transferred allowances

The estate is £200,000 above the £2,000,000 threshold. The residence allowance is withdrawn at £1 for every £2 over, so £100,000 of it is lost and only £75,000 survives. Push the estate to £2,350,000 and the allowance is gone completely.

The brutal arithmetic: in the band between £2,000,000 and £2,350,000, each extra £1 of estate costs 40p of tax on that pound plus 20p of lost allowance — a marginal rate of 60%. More on the taper.

Who actually pays it, and when

The timing is genuinely awkward. Tax is due at six months, but the bank usually won't release funds until probate is granted, and HMRC won't issue the clearance needed for probate until the tax is paid. The usual ways through are the direct payment scheme (banks pay HMRC directly from the deceased's accounts), an early release from a sympathetic bank, instalments on the property element, or an executor's loan.

Interest accrues from month seven whether or not probate has been granted. Late payment is common and expensive.

The five things that move the number most

1. Whether a home passes to direct descendants. Worth up to £175,000 of allowance, or £350,000 for a couple. Nothing else in the system is this easy to lose by accident.
2. Whether transferred allowances are claimed. Up to £500,000. Must be claimed within two years of the second death.
3. Gifts in the last seven years. They eat the nil-rate band before the estate does — see the 7-year rule.
4. Being above £2,000,000. The taper creates a 60% marginal band.
5. Charitable giving reaching 10% of the baseline amount. This drops the rate on the whole estate from 40% to 36%, and can leave the other beneficiaries with more money, not less.

That last one is worth a moment. On a £1,000,000 estate with no property going to children, leaving £60,000 to charity gives the beneficiaries £694,000. Increasing the gift to £67,500 — the 10% threshold — drops the rate to 36% and gives the beneficiaries £713,800. The charity gets £7,500 more and the family gets £19,800 more, because the tax bill falls by £27,300. The calculator works out this gap from your own figures and tells you which side of it you're on.

Put your own figures into the calculator