Inheritance Tax on an £800,000 Estate: Single person, no home to children
For an £800,000 estate (single person, no home to children), the tax-free threshold is £325,000. Inheritance Tax at 40% on the £475,000 above it comes to £190,000, leaving £610,000 for the beneficiaries.
| Estate value | £800,000 |
| Nil-rate band | £325,000 |
| Residence nil-rate band | £0 |
| Total tax-free threshold | £325,000 |
| Taxable estate | £475,000 |
| Inheritance Tax at 40% | £190,000 |
| Estate after tax | £610,000 |
| Tax as a share of the estate | 23.75% |
How this is worked out
Inheritance Tax is charged at 40% on the part of an estate above the tax-free threshold. The nil-rate band is £325,000 per person.
No residence nil-rate band applies, because the home does not pass to children or grandchildren.
Assumptions: no lifetime gifts in the previous 7 years, no reliefs such as Business or Agricultural Relief, no reduced 36% rate for charity gifts, and an estate value net of debts.
Sources: How Inheritance Tax works (GOV.UK)