Landlord inheritance tax calculator

It adds up your estate: the rental portfolio less its mortgages, your home net of any mortgage, and everything else less debts. It then deducts the £325,000 nil-rate band and, if your home goes to children or grandchildren, the residence nil-rate band of up to £175,000. The rest is taxed at 40%. If you're married, it allows for both spouses' bands on the second death. Nothing you enter is stored.

Inheritance tax is charged on the net value of what you own, so debts secured on the properties normally reduce the estate. A £2.5 million portfolio with £900,000 of mortgages adds £1.6 million to the estate, not £2.5 million. There are rules that restrict the deduction for some debts, depending on what the borrowing was used for and whether it's repaid, so check the position on your own loans before relying on it.

Anything left to a spouse or civil partner is normally free of inheritance tax, and any unused nil-rate band and residence nil-rate band can pass to the survivor. The calculator assumes everything passes to your spouse first and is taxed on the second death, with two nil-rate bands of £325,000 and up to two residence nil-rate bands of £175,000. That gives up to £1 million before tax, for estates under £2 million.

The residence nil-rate band is reduced by £1 for every £2 the estate is worth over £2 million. So a single person's £175,000 band disappears at £2.35 million, and a married couple's combined £350,000 disappears at £2.7 million. Because the portfolio counts in full, many landlords lose this band entirely. The calculator applies the taper to the net estate you enter and shows when the band has been reduced.

No. It only applies to a home you've lived in that passes to your direct descendants, such as children, stepchildren or grandchildren. Buy-to-let properties don't qualify, however they're left. The calculator caps the band at the value of your home, so if your home is worth less than the band available, only the home's value is relieved. Your other assets still benefit from the ordinary nil-rate band.

Because let property rarely qualifies. Business relief excludes businesses that consist wholly or mainly of making or holding investments, and HMRC regards a property rental business as likely to fall within that exclusion, however actively it's managed. The same goes for shares in a company that holds a rental portfolio. So the calculator treats the whole portfolio as taxable, which is the realistic starting point for most landlords.

It's the part of the inheritance tax bill attributable to your rental portfolio, worked out pro rata to its net value as a share of the whole estate. If the portfolio is half your net estate, half the tax is shown against it. It's a simple way to see how much of the bill planning around the portfolio could address. Who actually bears the tax depends on your will and how the estate is divided.

Yes. The £325,000 nil-rate band, the £175,000 residence nil-rate band and the £2 million taper threshold are frozen up to and including 2030/31. As property values rise, more of a portfolio's growth falls into the 40% charge each year. The calculator uses these frozen figures, so it's a fair guide to the position today, but the bill grows as your portfolio does.

An outright gift to an individual falls out of your estate if you live for seven years after making it. If you die within seven years, it's counted again, though tax on the gift is reduced on a sliding scale where death is three to seven years later. The calculator doesn't include gifts, so only take a gifted property out of your figures once seven years have passed. Gifting a rental property can also trigger capital gains tax.

Not without an inheritance tax problem. If you give a property away but keep benefiting from it, such as keeping the rent or using it free of charge, that's a gift with reservation of benefit and it stays in your estate. The calculator assumes you own everything you enter outright. Structures such as Family Investment Companies and trusts can separate control, income and growth, but each has tax costs and conditions of its own.

No. From 6 April 2027 most unused pension funds and death benefits will come into the estate for inheritance tax, with personal representatives responsible for reporting and paying. Death-in-service benefits and dependants' scheme pensions are excluded. If you have significant pension savings, the estimate will understate your position from that date. You can add your pension value to 'everything else' to see the likely effect.

Roughly, yes. If you own shares in a property company, their value is part of your estate. Enter the value of your shareholding, broadly the company's net assets, in place of the portfolio and mortgages. Shares in a property investment company don't usually qualify for business relief. Valuing shares for inheritance tax can involve discounts, for example for a minority holding, so the real figure may differ.

The calculator doesn't model it, but the rules can help. Gifts to charity in your will are free of inheritance tax, and if at least 10% of your net estate goes to charity, the rate on the rest falls from 40% to 36%. For landlords who already plan to leave something to charity, meeting the 10% test can be worthwhile. Your will needs careful drafting to get it right.

It ignores gifts made in the last seven years, trusts, pensions, life insurance, charity gifts, business and agricultural relief, overseas assets and residence status, and the detail of how nil-rate bands transfer between spouses. It assumes the residence nil-rate band is fully available on the second death and applies the taper to the whole estate. Use it to understand the scale of the bill, not to plan your will.

Earlier than most do. The seven-year rule for gifts, the time needed to restructure a portfolio, and the capital gains tax on moving property all favour starting while you're healthy and have options. Planning is usually worth exploring once the calculator shows a meaningful bill. We look at gifting, Family Investment Companies, trusts, wills and the order of steps, on a fixed fee agreed upfront, and we respond the same working day.