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Inheritance Tax Calculator UK 2018/19

Thanks to an era of spiralling property prices, more and more Britons are finding that the value of their home and their other assets is sufficient to attract a significant inheritance tax bill.

As recently as 2010, only around 2.5% of UK estates were liable to inheritance tax but this is projected to grow to closer to 12% by 2019.

By then, more than 65,000 UK families a year will be forced to deal with inheritance tax bills of some kind. Pop your details into our IHT calculator and find out whether you may have a potential inheritance tax liability to consider.

 

Inheritance Tax Calculator

Simply follow these four quick steps to work out your potential inheritance tax liability.
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Tax year to calculate Choose the tax year in which you want to make these calculations
 
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Who do you want to calculate the liability for? The calculator can provide an illustration for individuals or couples.
 
 
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Assets To calculate your potential inheritance tax liability we need some further information about the value of your assets.
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Liabilities To calculate your potential inheritance tax liability we need some further information about your liabilities
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Your Inheritance Tax Calculation

Your net value of estate:
Inheritance Tax Allowance:
Main Residence Allowance (2017/18 onwards):
The main residence nil-rate band is capped at the lower of the value of your home or the MRNRB threshold in that tax year.
Amount liable to Inheritance Tax:
Inheritance Tax Liability
Neil Adams - Inheritance Tax Expert

These calculators help but sometimes it doesn't beat talking to a human. If you need any support please do not hesitate to pop us a call on 02084327334 .

Neil Adams
Financial Adviser at Drewberry

IMPORTANT NOTES

This calculator is based on our understanding of current tax law, which is subject to change in the future

This IHT calculator doesn't take into account any gifts that you have made in your lifetime which may be subject to inheritance tax

The illustration provided by this inheritance tax calculator shouldn't be construed as legal or tax advice.

Calculate your inheritance tax bill

Totting up your inheritance tax bill

In order to calculate the inheritance tax liability that your estate will attract from the start of the 2017 tax year, you’ll need to:

  • Tally up the value of everything you own – including your home, properties, funds, shares, jewellery, furniture and any intellectual property you may plan to leave behind.
  • Deduct the value of your £325,000 nil-rate band (NRB) allowance, as well as any additional NRB allowances you may have inherited from a deceased spouse or civil partner (up to a maximum of £650,000), from the value of your estate.
  • Deduct the value of the new main residence allowance (£100,000 in the 2017 tax year) from your estate if it includes a family home that you intend to pass to a descendant.
  • Deduct the value of any additional main residence allowance you may have inherited from a deceased spouse or civil partner.
 

Calculating the new main residence allowance

The good news is that from the start of the 2017 tax year, the government will be introducing a new, additional inheritance tax allowance that can be applied to your main family home when it’s passed to a descendant.

The main residence nil-rate band (MRNRB) starts at £100,000 and is planned to rise by £25,000 every year until the start of the 2020/21 tax year when it will have reached £175,000.

From then on, this allowance will rise in line with inflation. Our IHT calculator includes a main residence allowance calculator for the 2017-2018 tax year and beyond, simply pop in your details to find out what you’re entitled to.

Our handy Inheritance Tax Calculator does all the hard work for you, simply pop in your assets and liabilities and the tax year you wish to make the IHT calculation for and the calculator will provide an illustration of your potential inheritance tax liability for that tax year.

 

How inheritance tax is calculated

Inheritance tax (IHT) will be charged by HMRC on any assets that are transferred from your estate to your descendants or other beneficiaries after you die.

  • Inheritance tax is charged at a rate of 40% on all the assets in your estate that exceed the current IHT threshold or ‘nil rate band’ (NRB), of £325,000. From the start of the 2017 tax year, Britons will also qualify for an additional main residence allowance which starts at £100,000.
  • Inheritance tax will also be charged against any large gifts you may make to your beneficiaries in the seven years prior to your death. Such gifts are referred to as potentially exempt transfers (PETs).
  • If you’re a UK resident, your estate will include your home, your investments and all of your other possessions, wherever they may be in the world. The main exceptions to these rules are generally assets that are held in trust or within a personal pension.

Be warned, though, the relief offered by the MRNRB has its limits. For those with the largest estates, worth more than £2 million, the MRNRB tapers down by £1 for every £2 the estate is worth over £2 million.

That means, in the 2017/18 tax year, an individual’s estate worth £2.1 million can only deduct £50,000 of the MRNRB. In the same tax year, estates worth £2.2 million or more have the relief revoked entirely.

Peter Banks
Wealth & Investments Specialist at Drewberry

Find out about inheritance tax advice from Drewberry Wealth

Take some advice on inheritance tax planning…

At Drewberry Wealth, we do everything we can to provide our clients and visitors to our site with all the information they need to make informed decisions about their finances.

Our Inheritance Tax Calculator and the inheritance tax planning pages on our site are intended to help inform you of the key decisions you’ll need to make and their consequences.

Even so, there’s no substitute for talking through your situation with an experienced adviser who can point out the pitfalls and create a solution that suits your needs.

If you feel ready to talk to a professional about how best to address your inheritance tax liability, don’t hesitate to give us a call on 0208 432 7333 or just click here.

Tom Conner, founder and director of Drewberry Wealth

“Inheritance tax is something that’s creeping up on all of us. The number of British homes worth more than the new £1m IHT limit for couples, which arrives in 2020, is set to treble in the next 15 years.

“By 2030, there will be at least a million homes in London worth £1m with another half million such properties in the South and East of England alone.

“A great number of British families will need to think about estate planning in the coming years or they could risk losing a treasured family home to IHT.”

Tom Connor
Director of Drewberry

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Tax treatment varies according to individual circumstances and is subject to change. The rates of tax, reliefs and allowances describe on this page are accurate at the time of writing (March 2018) based on our understanding of the relevant legislation.