Inheritance Tax Calculator: UK, US and South Africa

How to use the inheritance tax calculator

Inheritance tax by country at a glance

Beneficiaries do not normally pay inheritance tax themselves in the UK. The estate pays it before the money is shared out, and the executor deals with HMRC (the executor fee calculator shows what that work can cost).

How much inheritance tax will you pay in the UK? Six worked examples

A single person pays £70,000 on a £500,000 estate and £270,000 on £1 million, and a couple can pass on up to £1 million with no tax. The calculator above gives the same figures if you enter these numbers. Not sure what your estate is worth? Add up assets and debts with the net worth calculator first. Every example uses the 2026 to 2027 rates: 40% above the nil-rate band, with the residence nil-rate band only when a home goes to children or grandchildren.

The £1 million estate is the clearest split. With no home going to a child, the bill is £270,000. Leave the same estate with a home worth £400,000 to a child and it falls by £70,000, because the extra £175,000 allowance saves 40% of £175,000.

UK inheritance tax thresholds, the home allowance and the 7-year rule

UK inheritance tax is charged at 40% on the part of an estate above the nil-rate band (NRB). HMRC's thresholds page, read in November 2026, shows the NRB at £325,000 until 5 April 2031. That figure has not moved since 2009, so rising property values pull more estates over it each year. HMRC's Budget 2026 rates table keeps the 40% rate, the £325,000 band and the £175,000 residence band for both 2026 to 2027 and 2027 to 2028.

The residence nil-rate band (RNRB) is £175,000 until 5 April 2030. It applies when a home passes to children, stepchildren, foster children or grandchildren. There is no separate threshold for each child: the £175,000 is one amount for the estate, shared by value however many descendants inherit the home. Where the home is worth less than £175,000, only the home's value counts. Once an estate passes £2 million, the RNRB falls by £1 for every £2 above that line, and the full £175,000 disappears at £2.35 million.

A married couple or civil partners can pass on whatever is unused. If the first spouse to die leaves everything to the survivor, the survivor's estate gets two nil-rate bands and two residence bands, so up to £1,000,000 can pass to children with no tax. That is the answer to the usual "inheritance tax threshold for married couples" question, and it is why a widow or widower should enter the unused percentage in the calculator. A single person has £325,000, or £500,000 with a home left to descendants.

Gifts follow the 7-year rule. A gift to another person is free of inheritance tax if you live seven years after making it. Gifts made in the seven years before death use up the nil-rate band first. Taper relief only applies if the gifts add up to more than £325,000, and it lowers the tax on the gift, not the value of the gift:

The calculator counts gifts at full value and takes no taper relief, so treat the result as the upper end for gifts made three to seven years before death. Some gifts never count. HMRC lets you give away £3,000 each tax year, small gifts of up to £250 per person, and wedding gifts of up to £5,000 to a child, as long as you have not used another allowance on the same person.

Leave 10% or more of the net estate to charity and the rate on part of the estate drops from 40% to 36%. HMRC says the reduced rate applies to some assets, while the calculator applies 36% to the whole taxable amount, so check a large charitable bequest with a professional.

Two changes matter for plans made now. HMRC's Budget 2026 overview says most unused pension funds and pension death benefits come into the estate for inheritance tax from 6 April 2027. The same rates table shows the 100% allowance for Business/Agricultural Property Relief at £2.5 million. The calculator does not apply business or agricultural relief, so subtract any qualifying assets yourself.

US federal estate tax: the 2026 exemption, gifts and portability

The US federal estate tax has one of the highest exemptions in the world, and the top rate of 40% only applies above it ($30 million for a married couple using portability). In practice, fewer than 0.1% of estates pay any federal estate tax, and most people searching for a figure will owe nothing.

The Tax Cuts and Jobs Act of 2017 doubled the exemption from roughly $5 million (inflation-adjusted), and that elevated exemption was originally scheduled to sunset back down to about $7 million after 31 December 2025. The One Big Beautiful Bill Act (OBBBA), signed in July 2025, canceled that sunset and permanently reset the exemption to $15 million starting in 2026, with inflation indexing resuming in future years. Estates that had been planning around the old 2025 cliff should revisit that planning in light of the higher, now-permanent exemption.

The IRS says the estate tax is worked out on the taxable estate plus lifetime taxable gifts, and the tax is then reduced by the unified credit. That is why the calculator adds taxable gifts to the estate instead of taking them off. Only gifts above the annual exclusion count, which is $19,000 per recipient for 2026. Debts, administration costs, property left to a surviving spouse and qualified charities are deducted first.

A surviving spouse can also claim whatever exemption the first spouse did not use. The IRS calls this portability, and the election is made on a timely filed estate tax return. Enter that amount in the calculator to raise the exemption above $15 million. The IRS also says a return is required when the gross estate plus adjusted taxable gifts and the specific gift tax exemption is above $15 million for a 2026 death, so file one if you are near the line.

Several states run their own estate or inheritance taxes with lower thresholds, so a small estate can owe state tax and no federal tax. Check your state's revenue department before you rely on the federal figure.

South Africa estate duty: the R3.5 million abatement

South Africa charges estate duty at 20% on the first R30 million of the dutiable amount and 25% above R30 million. SARS gives an abatement of R3.5 million against the net value of the estate to reach that dutiable amount. Bequests to a surviving spouse are fully exempt, and the surviving spouse inherits any unused abatement from the first deceased spouse's estate, which doubles the abatement to R7 million for the second estate. The duty falls on the estate, not on the people who inherit.

Understanding estate duty is only part of the picture for Muslim families. Under South African law, an estate is shared out according to the will, while Islamic inheritance law (Faraid) sets fixed shares for each category of heir. Where the two differ, careful planning matters. Faraid Hub has Shariah-compliant estate planning tools and Faraid distribution calculators built for South African Muslim families. For the property side, including transfer duty on inherited property, SA Property Tools covers the South African property and legal tools.

Is there inheritance tax in Australia or Canada?

Australia has none. The Australian Taxation Office says there are no inheritance or estate taxes in Australia, though capital gains tax can apply when you dispose of an inherited asset, and income tax applies as usual to dividends or rental income from shares or property you inherit.

Canada works through the deceased person's final tax return. The Canada Revenue Agency says belongings, property and investments are deemed to be disposed of at death, even if they are not sold, so the return can carry taxable capital gains. It also reports RRSP income. The calculator does not cover either country, so use the CRA and ATO pages in the sources list for the detail.

Estate planning strategies

Common strategies to reduce inheritance tax exposure include: making use of annual gift allowances (£3,000 per year in the UK; the US annual exclusion is $19,000 per recipient in 2026); investing in qualifying business or agricultural assets that attract Business/Agricultural Property Relief in the UK; using life insurance held in trust to provide liquidity for IHT payments without increasing the taxable estate; and in the US, establishing irrevocable trusts to remove assets from the taxable estate. Professional advice from a qualified estate planning attorney or tax advisor is strongly recommended for estates approaching or above the relevant thresholds.