Inheritance tax (IHT) calculator for 2025/26 and life insurance
By WeCovr
However, there are several strategies available to help reduce this inheritance tax burden on your family. Our calculator below can assist you in estimating the potential inheritance tax liability for your heirs. By entering your assets and any liabilities, the calculator will provide an estimate of your estate's worth and the possible inheritance tax it may incur.
The inheritance tax calculator uses the most up-to-date allowances for the current tax year, including the Residence Nil-Rate Band (RNRB). This allowance helps reduce the tax burden by allowing the transfer of a family home without incurring inheritance tax. It is important to understand that these calculations are based on individual circumstances. For couples, the tax exemptions can potentially double, provided both partners qualify for the Main Residence Nil-Rate Band of £175,000 and the standard Nil-Rate Band of £325,000.
For personalised guidance tailored to your specific tax situation, please consult a qualified tax adviser, as the information provided here is not intended to serve as professional tax advice.
Inheritance Tax Calculator
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Value of your liabilities
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Will you be leaving property to your direct descendants (children / stepchildren, grandchildren etc.)?
Enter your figures above and tap Calculate to estimate your potential inheritance tax
Inheritance tax calculator guide for UK families
WeCovr's UK inheritance tax calculator helps you estimate IHT exposure using current nil-rate bands and residence allowances, with FCA-authorised guidance and over 900,000+ policies issued across protection products. Use it to understand the potential 40% tax charge and the steps that can reduce it.
What this inheritance tax calculator estimates
The calculator estimates your net estate after liabilities, then applies the standard nil-rate band and the residence nil-rate band if you plan to leave a home to direct descendants. It also considers charitable giving thresholds that can reduce the chargeable estate.
Results are indicative and designed to help you plan cover or advice, not replace professional tax guidance. The UK inheritance tax rate is typically 40% on amounts above the available allowances.
Standard nil-rate band: £325,000 per person (currently frozen until 2027/28).
Residence nil-rate band: £175,000 per person when eligible (tapered above £2 million estates).
Potential reduction when 10% or more of the estate goes to charity.
Key factors that can change your IHT liability
Inheritance tax outcomes depend on marital status, available transferable allowances, the value of the main residence, and gifts made within seven years. This calculator focuses on core allowances, but real estates can be more complex.
If you are married or in a civil partnership, unused nil-rate bands can transfer, which can double the allowances for the survivor. If your estate exceeds £2 million, the residence nil-rate band tapers down.
Gifts within seven years can be added back into the taxable estate.
Trusts, business relief, and agricultural relief can reduce exposure.
Property ownership structure and beneficiary choices affect eligibility.
How WeCovr supports IHT planning conversations
WeCovr can help you align life insurance cover with potential IHT exposure so beneficiaries are not forced to sell assets quickly. We also provide complimentary access to the CalorieHero AI calorie tracking app and offer discounts when customers take PMI or Life insurance.
We focus on clarity and comparability, helping you understand product features and costs before you speak to a qualified adviser.
Data sources used for assumptions
This guide references official UK inheritance tax thresholds and guidance, including GOV.UK and HMRC publications, as well as FCA consumer information on financial advice and protection products.
Common IHT planning options at a glance
| Option | Estimated cost | Key factors | Best for |
|---|---|---|---|
| Whole-of-life cover in trust | Higher premiums | Guaranteed payout on death | Covering a known IHT bill |
| Term cover aligned to gifting | Lower premiums | Covers 7-year window risk | Gifts that may be taxed |
| Lifetime gifting strategy | No premium | PET rules and taper relief | Reducing estate size |
Related WeCovr resources
FAQs
How accurate is this inheritance tax calculator?
It provides an estimate based on standard UK allowances and the information you enter. Complex estates may involve additional reliefs or gifting rules, so professional advice is recommended for accuracy.
Does the calculator include the residence nil-rate band?
Yes. If you indicate that you will leave a main residence to direct descendants, the calculator applies the residence nil-rate band and its tapering above the £2 million estate threshold.
Can life insurance help cover inheritance tax?
Yes. A life insurance policy, often written in trust, can provide a tax-free payout that helps beneficiaries pay any IHT due without selling assets quickly.
What is the current UK inheritance tax rate?
The standard rate is 40% on the portion of the estate above available allowances, subject to any reliefs or exemptions.
If your estate exceeds £325,000, there are two primary strategies to potentially increase the threshold and avoid inheritance tax on a larger portion of your assets:
The Main Residence Nil-Rate Band
If you own a home and pass it on to direct descendants (such as children, stepchildren, grandchildren, etc.) as your main residence, you can benefit from the main residence nil-rate band. This is an additional allowance set at £175,000 for the 2025/26 tax year, which is currently frozen.
This allowance applies to all estates valued at less than £2 million. For estates valued above this threshold, the allowance reduces by £1 for every £2 over £2 million.
The Transferable Nil-Rate Band
Married couples/civil partners can take advantage of the transferable nil-rate band, allowing them to transfer their £325,000 nil-rate band to each other. In the event of the death of one partner, if the deceased leaves everything to the surviving partner, it potentially doubles the survivor’s nil-rate band to £650,000.
This means the surviving partner can leave assets worth £650,000 upon their death without incurring any inheritance tax.
Combined Nil-Rate Bands
For an individual, combining the main residence nil-rate band of £175,000 (for the 2025/26 tax year) with the standard nil-rate band of £325,000 allows you to leave up to £500,000 to direct descendants without any inheritance tax liability.
In a marriage/civil partnership, each partner has their own nil-rate band and main residence nil-rate band. The main residence nil-rate band can also be transferred between partners, potentially allowing a combined total of up to £1 million to be passed to direct descendants without incurring inheritance tax.
Now that you have a rough idea how much your heirs might have to pay in inheritance tax when you pass away, you may want to add at least that amount to your life insurance sum assured to help them cover at least that part.
Please note that this calculator doesn't account for any gifts made, which may lead to a higher inheritance tax bill if the giver passes away within If the giver were to die within seven years of giving a substantial gift, this could leave the person receiving the gift with an unexpected inheritance tax (IHT) bill.
Such gifts are called Gift Inter Vivos - as explained in our Life Insurance Terms article. Our life insurance advisers have life insurance products set up via trusts that helps deal with such inheritance tax liabilities, including those arising from gifts and inheritance.
If you'd like to get your free and no-obligation assessment of life insurance requirements and which life and critical insurance products and which providers can be most suitable for your circumstances, you can do so in less than 30 seconds.
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