This calculator will calculate the potential inheritance tax (IHT) liability on a person’s estate at death, based on the current tax rate, nil rate band and reliefs. In general, all your assets, including your home and any other property, as well as your savings and investment and any life policies you have not put into trust may be added to together. Then, to the extent that the total exceeds the nil rate band of £325,000, it is subject to inheritance tax at 40%. Include all the amounts for your assets in the boxes provided, but do not include any assets that will pass to your spouse or civil partner – unless he or she is domiciled outside UK.
Then complete the details for any mortgages, loans or other liabilities you have outstanding. Add in any gifts that you have made during the last seven years unless they were covered by the IHT exemptions such as regular gifts from income. The calculator will tell you the total value of your net assets and your taxable estate, as well as your estimated IHT liability, on the assumption that you died this tax year.
The calculator does not take account of any nil rate band transferred from a spouse who predeceases you, not does it allow for the 36% tax rate which applies when, broadly speaking, at least 10% of your taxable estate is left to charity.
For example, with a property worth £780,000, investments of £550,000 and no liabilities or business assets, the value of the net assets is £1,330,000 of which £1,005,000 is subject to IHT at 40%, making the tax liability £402,000.