ProsperAbroad · Free tool
What would your children pay in inheritance tax?
Built for people who moved to the UK, bought a home here, and want to know what actually reaches their family. Nothing you type is sent anywhere — the sums run in your browser.
Rates and bands for the 2026/27 tax year · Nil-rate bands frozen to 5 April 2031 · Includes the pension rules starting 6 April 2027
Estimated inheritance tax bill
£0
How that is worked out
What stands out
The short version. Inheritance tax is charged at 40% on whatever your estate is worth above your tax-free allowances. Everyone gets a nil-rate band of £325,000. Leave your home to your children and you get up to £175,000 more. A married couple who plan it properly can pass on £1 million before a penny of tax is due.
Two things catch migrants out. From 6 April 2025 the UK taxes on residence rather than domicile, so once you have been UK resident for 10 of the last 20 tax years, the house you still own back home counts too. And from 6 April 2027, unused pension pots count as part of your estate — which is what pushes many ordinary families over the line for the first time.
The allowances, in plain numbers
| Allowance | Who gets it | 2026/27 |
|---|---|---|
| Nil-rate band | Everyone | £325,000 |
| Residence nil-rate band | Home left to children or grandchildren | £175,000 |
| Both, transferred from a late spouse | Widows and widowers | £500,000 |
| Couple’s combined maximum | Married or civil partners | £1,000,000 |
| Rate above the allowances | Standard | 40% |
| Rate where 10%+ goes to charity | Reduced | 36% |
Both bands are frozen until 5 April 2031. House prices are not. That freeze is why estates that owe nothing today may owe something in five years without anyone getting richer. Our full explainer covers this in more depth: what inheritance tax in the UK actually is.
The residence allowance shrinks on larger estates
Once an estate is worth more than £2 million, the £175,000 residence allowance falls by £1 for every £2 above that line. An estate of £2.35 million loses it entirely. The calculator applies this automatically.
The three things migrants get wrong
1. Thinking assets back home are out of reach
They were, under the old domicile rules. They are not now. Since April 2025 the test is simply how long you have lived here: 10 UK tax years out of the last 20 and your worldwide estate is in scope — the flat in Lagos, the land in Kerala, the account in Manila. Leaving the UK does not switch it off immediately either; a tail of between three and ten years follows you out. If you are holding assets in more than one country, how you structure investments beyond your ISA allowance is worth reading alongside this.
2. Assuming a husband or wife always inherits tax-free
Between two long-term UK residents, yes — unlimited and automatic. But if you are a long-term resident and your partner is not, only £325,000 passes to them tax-free. Everything above that is taxable on the first death. Your partner can elect to be treated as a long-term resident to remove the cap, at the price of bringing their own worldwide assets into UK inheritance tax. It is a real decision with real trade-offs, and it is one to take to a solicitor. Couples in this position should also read about joint accounts where partners have different immigration status.
3. Treating the pension as untouchable
Until now, leaving a pension untouched and spending your ISA first was sound tax planning, because the pension sat outside the estate. From 6 April 2027 most unused pension funds count. If you die on or after that date, your executors report the pot and settle the tax on it. Money left to a husband or wife is still exempt; money left to children is not. See what happens to your pension when you die and, if you are still building one, how workplace pensions work.
Four things that actually reduce the bill
- Write your life insurance in trust. Costs nothing, takes a form from your insurer, and lifts the whole payout out of your estate. On a £200,000 policy that is £80,000 of tax avoided.
- Make a UK will. Without one, intestacy rules decide who inherits, and they rarely match what you would have chosen — particularly if your family is spread across two countries or you are not formally married.
- Use the gift allowances. £3,000 a year, unlimited small gifts of £250, wedding gifts, and regular gifts out of surplus income all leave your estate straight away with no seven-year wait.
- Start the children’s own pots early. Money you move into a Junior ISA or hold in a stocks and shares ISA is still yours for inheritance tax, but gifting and growth in their name is not.
Questions people ask
Do my children pay the tax, or does the estate?
The estate pays, before anything is distributed. Your executors settle the bill with HMRC and your beneficiaries receive what is left. The exception is a gift you made within seven years of dying that exceeds the nil-rate band — there the person who received the gift can be liable.
I’m on a visa and not settled. Does inheritance tax still apply to me?
Yes, on anything you own in the UK, from day one. Your visa status makes no difference. What changes with time is your overseas assets: those come into scope once you have been a UK tax resident for 10 of the previous 20 tax years.
Does an ISA escape inheritance tax?
No. ISAs are free of income tax and capital gains tax, but they sit inside your estate like any other asset. A husband or wife can inherit the ISA wrapper through an additional permitted subscription, which preserves the tax shelter — but that is a different thing from escaping inheritance tax.
What if my property abroad is also taxed in that country?
The UK has double taxation agreements covering inheritance tax with a handful of countries, and unilateral relief can credit foreign death duties against the UK bill in other cases. You rarely pay twice in full, but you often pay the higher of the two. This calculator does not model foreign tax.
Can I just give the house to my children now?
You can, but if you carry on living in it rent-free it stays in your estate under the gift with reservation of benefit rules, and you may trigger a capital gains tax charge on the way. This is one of the most common and most expensive mistakes people make on their own. Take advice first.
How accurate is this estimate?
It is a good guide for a straightforward estate: a home, savings, pensions, insurance and some assets abroad. It does not handle trusts, business or agricultural property relief, taper relief on large gifts, foreign tax credits, or the spousal exemption cap in full. For anything complicated, a solicitor or chartered tax adviser is the right next step.
Carry on from here
How the sums work. Nil-rate band £325,000 and residence nil-rate band £175,000 for 2026/27, both frozen to 5 April 2031. Married, civil partnership and widowed estates are modelled on the second death with both sets of allowances transferred in full. Gifts within seven years are set against the nil-rate band first. The residence allowance is capped at the net value of the home and tapered by £1 for every £2 the estate exceeds £2 million. Pensions are included from 6 April 2027 under the Finance Act 2026. The 36% rate applies where the charitable gift is at least 10% of the estate after the nil-rate bands.
Not advice. This is an educational estimate, not a calculation of tax due and not personal financial or legal advice. Inheritance tax depends on facts this tool does not ask for, and the rules change. Speak to a solicitor or a chartered tax adviser before acting. ProsperAbroad is not regulated to give tax advice.
