Illustration
How inheritance tax applies to an estate
Change the size of an estate and see which allowance covers each part, and what is left to tax. An illustration, worked from today’s figures.
Move the figures, see the tax
Start from an example, or put in your own figures. Nothing you type is saved or sent.
Start from an example
Above £2,000,000 the residence band reduces by £1 for every £2.
Direct descendants include step-children, adopted and foster children, and their husbands, wives or civil partners. Nephews, nieces, brothers and sisters do not count.
Inheritance tax in this illustration: £40,000
- Covered by the nil-rate band £325,000
- Covered by the residence band £175,000
- Taxable £100,000
| The estate, after debts | £600,000 |
|---|---|
| Nil-rate band | £325,000 |
| Residence band used | £175,000 |
| Taxable | £100,000 |
| Tax at 40% | £40,000 |
This illustration assumes no gifts in the last seven years and no trust.
It assumes no pension, no farm or business property and no gift to charity, and that you are long-term UK residents.
Each of those changes the answer. From 6 April 2027 most unused pension funds will count in an estate too.
Worked examples
Each is worked out by the same rules as the illustration above.
Example A
Single. The home goes to the children.
- The estate, after debts
- £600,000
- The home
- £300,000
- Nil-rate band
- £325,000
- Residence band used
- £175,000
- Taxable
- £100,000
- Tax at 40%
- £40,000
Example B
Widowed, with all of both allowances unused. The home goes to the children.
- The estate, after debts
- £900,000
- The home
- £400,000
- Nil-rate bandIncluding 100% of a late husband’s, wife’s or civil partner’s band.
- £650,000
- Residence band used
- £350,000
- Taxable
- £0
- Tax at 40%
- £0
Example C
Widowed, with all of both allowances unused. The home goes to the children.
- The estate, after debts
- £2,200,000
- The home
- £600,000
- Nil-rate bandIncluding 100% of a late husband’s, wife’s or civil partner’s band.
- £650,000
- Residence band usedThe taper takes £100,000 off the residence band.
- £250,000
- Taxable
- £1,300,000
- Tax at 40%
- £520,000
Example D
Single. The home goes to the children.
- The estate, after debts
- £2,400,000
- The home
- £500,000
- Nil-rate band
- £325,000
- Residence band usedThe whole residence band, £175,000, is lost to the taper.
- £0
- Taxable
- £2,075,000
- Tax at 40%
- £830,000
Example E
Single. The home is left to a nephew.
- The estate, after debts
- £500,000
- The home
- £250,000
- Nil-rate band
- £325,000
- Residence band usedNot available: the home does not go to direct descendants.
- £0
- Taxable
- £175,000
- Tax at 40%
- £70,000
Example F
Single. A share of a home goes to the children.
- The estate, after debts
- £450,000
- The home
- £100,000
- Nil-rate band
- £325,000
- Residence band usedLimited to the value of the home, £100,000.
- £100,000
- Taxable
- £25,000
- Tax at 40%
- £10,000
Example G
Married. The first death, with everything left to the husband, wife or civil partner.
- The estate, after debts
- £800,000
- Passes to the husband, wife or civil partner
- £800,000
- Tax at 40%Carried to your husband, wife or civil partner: 100% of each allowance, to claim on the second death.
- £0
This result is an indication from your answers alone, not legal advice. Each case is assessed on its own merits. Aaron confirms what you need, in writing, once he has looked at your circumstances.
Any figure set by law is as at October 2026. Aaron checks each point against your facts.
Figures checked on 26 October 2026.
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