These notes will help you use the Inheritance Tax reduced rate calculator. The calculator can be used to work out the following:
There are some situations when you can't use the calculator. Find out more by following the link below.
Before you use the calculator you'll need to have some information to hand. The link below gives details of the information that you'll need to use it.
The amounts that you enter are the values of the assets that belong to the component that you're working out the calculation for.
All the fields marked with a red asterisk must be completed for the calculator to give the correct result.
Inheritance Tax reduced rate calculator - introduction
This is sometimes called the Inheritance Tax threshold. The nil rate band is the amount up to which an estate will have no Inheritance Tax to pay. For the tax years from 6 April 2012 until 5 April 2015 the amount is £325,000.
You can transfer any unused Inheritance Tax nil rate band from a late spouse or civil partner to the second spouse or civil partner when they die. This can increase the Inheritance Tax nil rate band of the second partner from £325,000 to as much as £650,000 depending on the circumstances. Find out more by following the link below.
Transferring an unused Inheritance Tax threshold
Some gifts made in the lifetime are exempt from Inheritance Tax - especially any gifts made more than seven years before the deceased died. However, not all gifts are exempt. Enter the total value of any gifts that are subject to Inheritance Tax. The value of any gifts with reservation of benefit shouldn't be included in this amount. They're included as a separate part of the estate. Find out more about gifts by following the link below.
How to value gifts for Inheritance Tax
The assets need to be valued and split into the relevant components before you work out the calculation. The amount that you use for the component that may qualify for the reduced rate is the gross value - before deducting any reliefs or exemptions.
Debts and liabilities such as outstanding mortgages, household bills and funeral expenses can reduce the amount of Inheritance Tax due. Enter the total value of all debts and liabilities.
How to value the debts and liabilities of someone who has died
Inheritance Tax reliefs allow an estate to pass on certain assets free from Inheritance Tax. Enter the total value of relief that is due.
Business, Woodland, Heritage and Farm Relief
This is the amount of the charitable donation that has been made in the will. If you want the calculator to work out the amount of the donation that has to be made to qualify for the reduced rate of Inheritance Tax enter a zero (0) in this box.
Your estate usually doesn't owe Inheritance Tax on anything you leave to a spouse or civil partner who has their permanent home in the UK even if the amount is over the threshold. There are also some other organisations that qualify for exemption find out more in the link below. Enter the total value of these assets.
Enter the net total of all other components of the estate and any assets classed as 'gifts with reservation' after any deductions for debts, liabilities, reliefs and exemptions.
Once you're satisfied that the figures that you have input are correct select 'Calculate'. If you wish to start again select 'Clear form'.
This is a complex calculation. HM Revenue and Customs will do the calculation for you if you contact them. Follow the link below for contact details.
Contact details for probate and Inheritance Tax enquiries
The calculator shouldn't be used if the estate doesn't owe any Inheritance Tax. If you have used the calculator in this situation, the results page may show a negative amount.
