Client Login 
Retirement assessment 
Book a call 
0117 990 2602 
Inheritance Tax Calculator (2026/27)
Your family’s position under today’s rules, and from 6 April 2027, when unused pension funds join your estate
Inheritance Tax Calculator 2026/27
What would your family actually pay?
Your position under today’s rules, and under the rules that take effect on 6 April 2027. That is when unused pension funds join your estate for the first time. No other calculator we know of models the change.
The same estate, before and after the change
Before 6 April 2027
Pensions excluded
From 6 April 2027
Unused pensions included
,
Illustrative only, not financial advice. Uses 2026/27 allowances: a £325,000 nil-rate band and up to £175,000 residence nil-rate band each. The residence band falls by £1 for every £2 the estate exceeds £2 million. Married couples are modelled on second death with both sets of allowances, everything passing to the survivor tax-free first. The April 2027 change (Finance Act 2026) brings unused pension funds into the estate. Pensions passing to a spouse remain exempt. Defined-benefit pensions in payment, annuities and death-in-service benefits are generally not included. Ignores gifts made in the last seven years, business and agricultural reliefs, and the 36% charity rate. If death occurs after age 75, beneficiaries also pay income tax at their own rate on pension withdrawals. Talk to us about what the change means for your family, the first conversation is free.
The 2026/27 figures first, then what they mean for you
Everyone has a £325,000 inheritance tax allowance, and up to £175,000 more when a home passes to children or grandchildren. Married couples and civil partners can combine both sets on the second death, up to £1 million tax-free between them. Above the allowances, the rate is 40%. Estates over £2 million lose £1 of the residence allowance for every £2 over, so larger estates reach 40% sooner than most people expect.
From 6 April 2027, under the Finance Act 2026, unused pension funds will be counted in your estate for the first time. This covers SIPPs, drawdown accounts, and workplace pots. Pensions passing to a spouse stay exempt. On second death, a pension that would pass to your children tax-free today may face 40% inheritance tax. It can also drag the rest of the estate over the £2 million taper at the same time. We've written about what the 2027 pension change means in detail.
The calculator above shows both positions side by side. If the number it produces is uncomfortable, the honest news is that most of it is plannable with time. There are nine established ways to reduce an inheritance tax bill. These range from gifting and spending order to trusts. Pension decisions made before April 2027 count double.
Frazer James is an independent, FCA-regulated firm of Certified Financial Planners. Advice covers the whole of the market, there is no initial fee, and the first meeting is free.
What counts as your estate
Your home, savings, investments, second properties and business interests, minus debts and the mortgage. From April 2027, unused pension funds join the list, which is what changes the arithmetic for most families with larger pensions.
The allowances and the £2m taper
£325,000 each, plus up to £175,000 where the home passes to direct descendants, up to £1 million for a couple. Estates over £2 million lose residence allowance at £1 for every £2 over, an effective 60% band few people see coming.
The April 2027 pension change
Now law under the Finance Act 2026. From 6 April 2027, unused pensions join the estate on death. After age 75, beneficiaries also pay income tax on withdrawals. This can take the combined rate on a pension to around 64%.
Since working together, I feel more organised, more secure and more positive about the future. The advice has been exceptionally valuable, financially, professionally and personally.
Questions people ask about inheritance tax
How much can I inherit from my parents without paying inheritance tax?
In the UK, inheritance tax is charged on the estate before anything reaches you, beneficiaries don't pay tax simply for receiving an inheritance. A single parent's estate has at least £325,000 tax-free, rising to £500,000 if the home passes to children or grandchildren. Where both parents' allowances combine, up to £1 million can pass tax-free. Above the available allowances, the estate pays 40%.
How much tax will I pay on £100,000 of inheritance?
As the beneficiary, you usually pay nothing. The estate settles inheritance tax before distributions. What matters is whether the estate as a whole is above its allowances. £100,000 above the threshold creates a £40,000 inheritance tax bill at the 40% rate. If you inherit a pension from someone who died after age 75, you pay income tax on what you draw from it. This is charged at your own rate.
Will my pension be counted for inheritance tax?
From 6 April 2027, the Finance Act 2026 brings unused pension funds and death benefits into the estate. This applies to deaths on or after that date. Pensions passing to a spouse or civil partner remain exempt. Defined-benefit pensions in payment, annuities and death-in-service benefits are generally outside the change. Until then, unused pensions usually pass free of inheritance tax.
How do I reduce a 40% inheritance tax bill?
The established routes include using both spouses' allowances properly and making gifts more than seven years before death. You can also use the £3,000 annual gifting exemption and gifts from surplus income. Charitable legacies are another option: giving 10% to charity cuts the rate to 36%. Trusts work well in the right circumstances. Before April 2027, it is worth reviewing how pensions are positioned. Which combination fits depends on the estate. This is exactly what a financial planner models.
What is the residence nil rate band?
An extra allowance of up to £175,000 per person is available on top of the £325,000 nil-rate band. It applies when your home, or your share of it, passes to children, stepchildren or grandchildren. It transfers between spouses like the main allowance. However, it tapers away on estates over £2 million. It is reduced by £1 for every £2 over that threshold, and disappears entirely on the largest estates.
Reviewed by
BSc, MLIBF, PETR, Chartered ALIBF · Co-Founder and Chartered Associate
Chris has spent over a decade in financial planning and specialises in research and technical analysis. He checks every figure and calculation on this page before it is published.
TALK TO A CERTIFIED FINANCIAL PLANNER
A free, no-obligation conversation about your estate, your pension and what the April 2027 change means for your family. No cost, and no pressure to proceed.