What is estate planning?

Estate planning is the process of arranging your assets, property, and affairs to ensure your wealth is distributed according to your wishes after death. It includes making a will, setting up trusts, and planning for inheritance tax.

What is the inheritance tax threshold in the UK?

The inheritance tax (IHT) threshold is £325,000 (2026). This is the nil-rate band. Estates over this threshold are taxed at 40%. There's also a residence nil-rate band of £175,000 for passing your home to direct descendants.

How can I reduce inheritance tax?

You can reduce IHT by: giving gifts (up to £3,000/year tax-free), leaving assets to a spouse/civil partner (exempt), using trusts, investing in Business Relief assets, and leaving 10%+ of your estate to charity (reduces rate to 36%).

Do I need a will for estate planning?

Yes, a will is essential for estate planning. Without a will, the intestacy rules determine who inherits your estate, which may not match your wishes. A will also allows you to appoint guardians for children and executors.

Estate Planning Calculator UK - Plan Your Legacy & Inheritance

📝 Complete Guide to Estate Planning in the UK

This estate planning calculator UK helps you understand the value of your estate and potential inheritance tax liability. With UK inheritance tax (IHT) at 40%, planning your estate is essential to protect your legacy and ensure your beneficiaries receive what you intend.

💰 UK Inheritance Tax Rules (2026)

Understanding IHT is crucial for estate planning:

Nil-Rate Band (NRB): £325,000 (frozen until 2028)
Residence Nil-Rate Band (RNRB): £175,000 (available when passing home to direct descendants)
Combined Threshold: £500,000 for most estates with a property
IHT Rate: 40% on anything over the threshold
Spouse Exemption: Transfers to spouse/civil partner are IHT-free

📊 IHT Calculation Example

Estate Value: £750,000
Threshold (NRB + RNRB): £500,000
Taxable Amount: £250,000
IHT at 40%: £100,000
Beneficiaries Receive: £650,000

📈 Ways to Reduce Inheritance Tax

Annual Gift Exemption: £3,000 per year tax-free
Small Gifts: £250 per person per year
Wedding Gifts: £5,000 (child), £2,500 (grandchild), £1,000 (others)
Spouse Exemption: Unlimited transfers to spouse/civil partner
Charitable Donations: Leave 10%+ to charity, IHT rate drops to 36%
Business Relief: Some business assets qualify for 100% IHT relief
Agricultural Relief: Farmland can be 100% IHT-free

📊 UK Estate Planning Statistics (2026)

Average UK estate value: £286,000
60% of UK adults have not made a will
Only 30% of estates pay inheritance tax
Average IHT bill: £50,000
IHT receipts reached £7.5B in 2025

⚡ Essential Estate Planning Documents

Will: Specifies how your estate is distributed
Power of Attorney: Appoints someone to manage affairs if you become incapacitated
Trusts: Can reduce IHT and control how assets are distributed
Letter of Wishes: Non-binding guidance for executors
Funeral Plan: Pre-pay funeral expenses to reduce estate value

📈 Steps to Effective Estate Planning

Calculate your estate value using this calculator
Make a will – seek professional advice for complex estates
Consider IHT-efficient gifts – use annual allowances
Review regularly – update after major life events
Seek professional advice – for estates over £1M or complex situations

⚡ Key Takeaways

Use the 40% IHT rate and £325k threshold in your planning
Make a will to control who inherits your assets
Consider gifts to reduce estate value
Review your estate plan annually
Seek professional advice for complex estates

Estate Planning Calculator UK

📊 Your Estate Details

📊 Estate Breakdown

📊 Inheritance Tax Calculation