2026/27 calculator, with pensions from April 2027
Inheritance tax calculator
A single person leaving a £500,000 estate pays £70,000 inheritance tax in 2026/27: 40% of everything above the £325,000 nil-rate band. If a home worth at least £175,000 goes to their children or grandchildren, the bill falls to £0. From 6 April 2027 unused pensions count too, so a widow with a £900,000 estate, including a £500,000 home left to her children, and a £400,000 pension would go from £0 to £120,000. Try your own figures below.
No late spouse or civil partner's allowances to add.
Property, savings and investments, less debts. Include your home.
Already part of the estate above.
Direct descendants. This unlocks the residence nil-rate band.
Pots that can pay out on death. Death-in-service benefits and dependants' scheme pensions are left out.
Unused pensions count towards the estate for deaths on or after that date.
A share of the estate after debts and any business relief.
Optional, and part of the estate above. 100% relief on the first £2,500,000, 50% above.
Inheritance tax
£160,000
17.8% of the £900,000 estate, at 40% on £400,000
- Nil-rate band
- £325,000
- Residence band
- £175,000
- Taxed at 40%
- £400,000
- Added by the pension
- £100,000
How the bill is worked out
- Estate, not counting pensions
- £650,000
- Unused pensions
- + £250,000
- Residence nil-rate band used
- - £175,000
- Nil-rate band used
- - £325,000
- Taxed at 40%
- £400,000
- Leaving about £57,500 to charity (8.8% of the estate outside pensions, after any business relief) would cut the rate to 36%. This is an estimate.
Income tax for whoever inherits the pension
If you die at 75 or over, the beneficiary also pays income tax at their own rate on what they draw. From 6 April 2027 that is charged on what is left after inheritance tax.
- Pension
- £250,000
- Inheritance tax
- £100,000
- Income tax
- £60,000
- They keep
- £90,000
Combined, 64% of the pension goes in tax.
Inheritance tax here is the extra the pension adds to the bill. HMRC regulations and guidance on the new rules are still pending, so how the bill is shared between the pension and the rest of the estate is an estimate.
Inheritance tax on common estates in 2026/27
| Estate | Counted for IHT | Tax-free bands | Inheritance tax | Effective rate |
|---|---|---|---|---|
| Single, £500,000 estate, home not left to children | £500,000 | £325,000 | £70,000 | 14% |
| Single, £500,000 estate, £300,000 home to children | £500,000 | £500,000 | £0 | 0% |
| Widowed, £1,000,000 estate, £600,000 home to children | £1,000,000 | £1,000,000 | £0 | 0% |
| Widowed, £900,000 estate and £400,000 pension, death before 6 April 2027 | £900,000 | £1,000,000 | £0 | 0% |
| Widowed, £900,000 estate and £400,000 pension, death on or after 6 April 2027 | £1,300,000 | £1,000,000 | £120,000 | 9.2% |
| Single, £2,200,000 estate, £500,000 home to children | £2,200,000 | £400,000 | £720,000 | 32.7% |
| Widowed, £2,200,000 estate, £800,000 home to children | £2,200,000 | £900,000 | £520,000 | 23.6% |
| Single, £1,000,000 estate, 10% to charity | £1,000,000 | £325,000 | £207,000 | 20.7% |
| Single, £4,000,000 estate with £3,000,000 of business property | £4,000,000 | £325,000 | £370,000 | 9.3% |
| Married, £1,500,000 estate and £300,000 pension, all to spouse | £1,800,000 | All exempt | £0 | 0% |
Estates are after debts. Widowed means a late spouse's bands were left fully unused. Pensions count only for deaths on or after 6 April 2027, and the charity row uses the 36% rate. Business property gets 100% relief on the first £2,500,000 and 50% above.
What a beneficiary keeps from a £100,000 pension after April 2027
| Member | Inheritance tax | Income tax | Beneficiary keeps | Combined rate |
|---|---|---|---|---|
| Died under 75 | £40,000 | £0 | £60,000 | 40% |
| Died 75 or over, beneficiary pays 20% | £40,000 | £12,000 | £48,000 | 52% |
| Died 75 or over, beneficiary pays 40% | £40,000 | £24,000 | £36,000 | 64% |
| Died 75 or over, beneficiary pays 45% | £40,000 | £27,000 | £33,000 | 67% |
Death on or after 6 April 2027, with other assets already using the tax-free bands, so the pension adds 40% inheritance tax. Income tax applies at the beneficiary's marginal rate on what is left.
How inheritance tax works
Inheritance tax is charged on the estate of someone who has died: their property, money and possessions, less any debts. The first £325,000 is covered by the nil-rate band, and everything above the available bands is taxed at 40%. The rate falls to 36% if 10% or more of the net estate goes to charity.
Anything left to a spouse or civil partner, or to a charity, is exempt. So a single person with a £500,000 estate whose home does not go to their children pays £70,000: 40% of the £175,000 above £325,000.
The allowances, and how they pass between spouses
Everyone has a £325,000 nil-rate band. If your home goes to your children or grandchildren, you also get a residence nil-rate band of up to £175,000.
When someone leaves everything to their spouse or civil partner, there is no inheritance tax, and their unused bands pass to the survivor. The second estate can then use up to £650,000 of nil-rate band and £350,000 of residence band: £1,000,000 in all, if a home worth at least £350,000 goes to their children and the estate is no more than £2,000,000.
If the first spouse used part of their bands, only the unused share passes on. The calculator applies the share you enter to both bands.
Thresholds frozen to April 2031
Finance Act 2026 keeps the £325,000 nil-rate band, the £175,000 residence band and the £2,000,000 taper threshold where they are up to and including 2030/31, which ends on 5 April 2031. Any growth in an estate's value over that time is measured against the same figures.
The residence nil-rate band and its taper
The residence band is the lower of £175,000 and the value of the home passed to direct descendants, such as children or grandchildren. A late spouse's unused share is added on top.
For estates worth more than £2,000,000, the band falls by £1 for every £2 over that figure. A single person's £175,000 has gone by £2,350,000, and a full £350,000 after a transfer has gone by £2,700,000. The estate value for the taper is counted before reliefs, such as business relief, and before exemptions, such as gifts to a spouse.
| Estate of £2,200,000 | Residence band left | Inheritance tax |
|---|---|---|
| Single, £500,000 home to children | £75,000 | £720,000 |
| Widowed with full transfers, £800,000 home to children | £250,000 | £520,000 |
From 6 April 2027, unused pensions are part of the estate, so the calculator counts them towards the £2,000,000 too.
Pensions and inheritance tax from April 2027
Finance Act 2026 brings most unused pensions into the estate for deaths on or after 6 April 2027. Before then, unused pensions sit outside it.
What is included: unused defined contribution pots that can pay out death benefits, and defined benefit lump sum death benefits that must, or can reasonably be expected to, be paid, whether or not the scheme has discretion.
What is left out:
- dependants' scheme pensions from defined benefit and collective defined contribution (CDC) schemes;
- death-in-service benefits paid only because the member was employed immediately before death;
- dependants' and nominees' annuities bought alongside a lifetime annuity;
- trivial commutation lump sums that end a dependants' scheme pension.
Pensions left to a spouse or civil partner, or to a charity, stay exempt.
Who pays: the personal representatives, usually the executors, report and pay the tax. They can tell pension schemes to hold back 50% of the benefits for up to 15 months. A beneficiary can have the scheme pay the tax on their benefits directly if it is at least £1,000, subject to a 35-day time limit.
Take a widow with full transfers, a £900,000 estate including a £500,000 home left to her children, and a £400,000 pension. Her bands come to £1,000,000. Before April 2027 the bill is £0. After it, the estate counts as £1,300,000 and the bill is £120,000, all of it because of the pension.
Income tax after 75
If the member dies at 75 or over, the beneficiary also pays income tax at their marginal rate on what they draw. From 6 April 2027 the taxable amount is reduced by the inheritance tax paid on it. If the member dies under 75, most benefits are income tax free up to the Lump Sum and Death Benefit Allowance of £1,073,100.
If the widow above died at 75 or over and her pension went to a 40% taxpayer, they would pay £112,000 of income tax on the £280,000 left after inheritance tax, and keep £168,000 of the £400,000.
Business and farm relief from April 2026
From 6 April 2026, agricultural and business property gets 100% relief on the first £2,500,000 combined and 50% relief above that. Shares on AIM, and other shares not listed on a recognised stock exchange, get 50% relief in all cases and do not use the £2,500,000 allowance. Any unused allowance passes to a surviving spouse or civil partner.
A single person with a £4,000,000 estate that includes £3,000,000 of qualifying business property gets £2,750,000 of relief and pays £370,000. The calculator applies one £2,500,000 allowance and does not model AIM shares.
Ways to reduce inheritance tax
These follow directly from the rules above.
- Leave everything to a spouse or civil partner. No tax is due on the first death, and the unused bands pass on, giving the survivor up to £1,000,000 of tax-free bands.
- Leave the home to children or grandchildren. That unlocks up to £175,000 of residence band per person, worth up to £70,000 of tax, tapering away for estates over £2,000,000.
- Leave 10% to charity. A single person with a £1,000,000 estate who leaves £100,000 to charity pays £207,000 instead of £270,000, so the gift costs the other heirs only £37,000. HMRC measures the 10% against a baseline: the estate after the nil-rate band, with the charity gift added back. That can make a smaller gift enough, and the calculator estimates it.
- Leave pensions to a spouse, civil partner or charity. Those exemptions still apply to pensions from April 2027.
Common questions
Will my pension be subject to inheritance tax?
For deaths on or after 6 April 2027, most unused pension pots count towards your estate. A widow with a £900,000 estate, a £500,000 home going to her children and a £400,000 pension would pay £120,000, against £0 before that date. Pensions left to a spouse, civil partner or charity stay exempt, and death-in-service benefits and dependants' scheme pensions are left out.
How much inheritance tax is due on a £500,000 estate?
£70,000 for a single person: 40% of the £175,000 above the £325,000 nil-rate band. If a home worth at least £175,000 goes to their children or grandchildren, the residence band takes the threshold to £500,000 and the bill falls to £0.
How much can a married couple leave tax-free?
Up to £1,000,000 in 2026/27, if the first to die leaves everything to the other and the survivor leaves a home worth at least £350,000 to children or grandchildren, with an estate of no more than £2,000,000. That is two £325,000 nil-rate bands and two £175,000 residence bands.
What is the £2 million inheritance tax taper?
The residence band falls by £1 for every £2 an estate is worth over £2,000,000. A single person with a £2,200,000 estate and a £500,000 home going to their children keeps £75,000 of the £175,000 band and pays £720,000. For a single person the band has gone completely by £2,350,000. From 6 April 2027 unused pensions count towards the £2,000,000.
Do I pay income tax on a pension I inherit?
Only if the person died at 75 or over. You then pay income tax at your own rate on what you draw, charged from 6 April 2027 on what is left after inheritance tax. On a £100,000 pension where the estate's bands are already used, £40,000 goes in inheritance tax and a 45% taxpayer pays £27,000 of income tax, keeping £33,000. Under 75, most benefits are income tax free up to £1,073,100.
Does leaving money to charity reduce inheritance tax?
Yes. Gifts to charity are exempt, and leaving 10% or more of the net estate cuts the rate from 40% to 36%. A single person with a £1,000,000 estate who leaves £100,000 to charity pays £207,000 instead of £270,000.
How does business property relief work from April 2026?
Agricultural and business property gets 100% relief on the first £2,500,000 combined and 50% above it. A single person whose £4,000,000 estate includes £3,000,000 of qualifying business property gets £2,750,000 of relief and pays £370,000.
Official sources
Every rate and threshold on this page is checked against these official pages. How we calculate
- How Inheritance Tax works: thresholds, rules and allowances (GOV.UK)
- Inheritance Tax thresholds and interest rates (HMRC)
- Inheritance Tax: residence nil rate band (HMRC)
- Finance Act 2026, section 72: rate bands for 2030-31 (legislation.gov.uk)
- Inheritance Tax: unused pension funds and death benefits (HMRC)
- Finance Act 2026, section 66: tax to be charged on certain pension interests (legislation.gov.uk)
- Tax on a private pension you inherit (GOV.UK)
- Agricultural property relief and business property relief changes (HMRC)
- Inheritance tax reliefs threshold to rise to £2.5m for farmers and businesses (GOV.UK)
- Finance Act 2026, Schedule 12: reform of reliefs for business property and agricultural property (legislation.gov.uk)
- IHTM45009: reduced rate for gifts to charity, calculating the baseline amount (HMRC)
Related calculators
Assumes no lifetime gifts or trusts and one £2,500,000 relief allowance. The charity baseline and the pension's share of the bill are estimates while HMRC regulations and guidance on pensions are pending. Not personal advice.
Updated