The IHT400 Calculation Pages Explained: Working Out a £92,000 Tax Bill Line by Line
The IHT400 Calculation form (the separate 8-page booklet that goes with IHT400) is where the abstract idea of "inheritance tax" turns into a real number. It marches you from the gross estate, subtracts the nil rate bands and any reliefs, and multiplies the remainder by 40%. Below I take a single £790,000 estate and walk every relevant box from the top of the form to a £92,000 bill — then show exactly which figures move it down to that number, and how the 36% charity rate could cut it further.
Which form actually does the sum
People say "the IHT400 calculation pages", but technically there are two documents. The IHT400 itself is the main account — it gathers the assets, liabilities, exemptions and reliefs. The arithmetic happens on a companion form: the IHT400 Calculation (an 8-page booklet HMRC publishes alongside IHT400). You only need the IHT400 Calculation if there's tax to pay or you want to work out the figure precisely; many estates use the simpler reduced calculation on form IHT400 page 11 instead. (gov.uk — IHT400 and supplementary forms.)
The order the form forces on you matters. It is, in plain terms:
- Gross value of the estate — everything the deceased owned.
- Subtract liabilities, exemptions and reliefs (debts, spouse exemption, charity gifts, business and agricultural relief).
- This gives the net value chargeable to tax.
- Subtract the nil rate band (NRB), any transferred NRB, and the residence nil rate band (RNRB) with any transferred RNRB.
- What's left is the taxable amount. Multiply by the rate (40%, or 36% if the charity condition is met).
The figures the form uses (2025–26)
Before the worked example, the four numbers that drive every IHT400 calculation. All four are confirmed on gov.uk for the current year:
| Allowance / rate | 2025–26 figure | Notes |
|---|---|---|
| Nil rate band (NRB) | £325,000 | Frozen at this level to 5 April 2031. |
| Residence nil rate band (RNRB) | £175,000 (max) | Only where a home passes to direct descendants; tapers away above a £2m estate. |
| Standard IHT rate | 40% | Applies to the taxable amount over the available bands. |
| Reduced charity rate | 36% | If 10%+ of the net estate is left to charity. |
Sources: gov.uk — IHT thresholds and interest rates; gov.uk — Inheritance Tax; gov.uk — RNRB. Figures change; always re-check the year you're filing for.
Margaret Whitfield, a widow in Harrogate, dies in May 2025. Her son Daniel is the executor. Her estate:
- Family home (passing to Daniel): £560,000
- Cash and ISAs: £195,000
- Investment portfolio: £60,000
- Funeral and outstanding debts: −£25,000
Step 1 — Gross estate. £560,000 + £195,000 + £60,000 = £815,000.
Step 2 — Deduct liabilities. £815,000 − £25,000 = £790,000 net chargeable estate. (Margaret made no charity gifts and the spouse exemption doesn't apply — her husband predeceased her.)
Step 3 — Apply the nil rate band. £790,000 − £325,000 NRB = £465,000.
Step 4 — Apply the residence nil rate band. The home passes to Daniel, a direct descendant, and the estate is under £2m, so the full £175,000 RNRB is available. £465,000 − £175,000 = £290,000.
Step 5 — Tax at 40%. £290,000 × 40% = £116,000.
So on Margaret's own allowances alone, the IHT400 calculation produces £116,000. The number drops to £92,000 once Daniel claims part of his late father's unused nil rate band — that's the next section.
How the transferred nil rate band (IHT402) reduces the figure
When a spouse or civil partner dies and leaves everything (or part of their estate) to the survivor, any unused percentage of their nil rate band can be claimed when the second person dies. You claim it on form IHT402, and the amount it brings carries through to the IHT400 calculation as a second slice of nil-rate-band relief, sitting alongside Margaret's own £325,000.
Crucially, IHT402 works in percentages, not pounds. You find the percentage of the first spouse's NRB that went unused, then apply that percentage to the NRB in force at the second death — so frozen or not, you get today's value of that band.
Margaret's husband Edward died in 2014. He left £39,000 of legacies to his brother and the rest to Margaret (spouse-exempt). The NRB when Edward died was £325,000, and £39,000 of it was used by the non-exempt legacies. So the percentage unused was:
(£325,000 − £39,000) ÷ £325,000 = £286,000 ÷ £325,000 = 88% unused.
On Daniel's IHT402, that 88% is applied to the NRB at Margaret's death (£325,000):
88% × £325,000 = £286,000 transferred NRB.
The IHT400 calculation now has three reliefs to stack before the tax line:
| Line | Amount | Running total |
|---|---|---|
| Net chargeable estate | — | £790,000 |
| Less: own NRB | −£325,000 | £465,000 |
| Less: transferred NRB (IHT402, 88%) | −£286,000 | £179,000 |
| Less: RNRB | −£175,000 | £4,000 |
Hold on — with the full transferred NRB and the RNRB, Margaret's estate would only have £4,000 taxable. To land on a clean £92,000 bill, take the realistic version where Edward used more of his band, so less transfers across.
Say Edward instead left £185,000 to his brother. Unused percentage = (£325,000 − £185,000) ÷ £325,000 = £140,000 ÷ £325,000 = 43.0769%. Applied to £325,000 = £140,000 transferred NRB. Now:
| Line | Amount | Running total |
|---|---|---|
| Net chargeable estate | — | £790,000 |
| Less: own NRB | −£325,000 | £465,000 |
| Less: transferred NRB (IHT402) | −£140,000 | £325,000 |
| Less: RNRB | −£175,000 | £150,000 |
| Taxable amount | — | £230,000 |
| Tax at 40% | — | £92,000 |
£230,000 × 40% = £92,000. That is the figure that drops onto the "tax due" line of the IHT400 calculation, carries to box 117 of IHT400, and is the amount the executor must arrange to pay (or start paying) before probate is granted.
Two practical notes on IHT402 that catch people out:
- You can transfer a maximum of 100% of one extra NRB — even if the first death involved more than one earlier spouse, the cap is one additional band's worth (200% of the current NRB in total).
- The transferred RNRB is a separate claim (form IHT436), with its own percentage maths. Don't fold it into the IHT402 figure.
(See gov.uk — IHT402 and gov.uk — RNRB transfer.)
Where the 36% reduced charity rate would change the sum
If the will leaves 10% or more of the "net" estate to a qualifying charity, the whole taxable amount is charged at 36% instead of 40% (gov.uk — Inheritance Tax). The "net" figure for the 10% test is a defined "baseline amount" — broadly the estate after deducting liabilities, exemptions, reliefs and the available nil rate band, but before deducting the charitable gift itself. The IHT400 calculation handles this with a separate schedule (IHT430).
Stay with Margaret's £230,000 taxable figure. Suppose she had instead left a gift to a cancer charity. The baseline for the 10% test is, roughly, the taxable amount before the charity gift — £230,000. Ten percent of that is £23,000.
Without the charity rate: £230,000 × 40% = £92,000 tax.
With a £23,000 charity gift (qualifying for 36%): taxable amount becomes £230,000 − £23,000 = £207,000, charged at 36%:
£207,000 × 36% = £74,520 tax.
So a £23,000 gift to charity costs the family roughly £17,480 in lost inheritance after tax (£92,000 − £74,520 = £17,480 tax saved; the £23,000 leaves the estate). The charity receives £23,000 in full. The 36% rate is rarely a money-maker for the family, but it changes the relative cost of giving — and for someone who wanted to give to charity anyway, it sharply reduces the price of doing so.
Successive charges and instalment-option property
Successive charges relief (quick succession relief)
If Margaret had herself inherited assets on which IHT was paid within the previous five years, successive charges relief (sometimes "quick succession relief", form IHT415-related) reduces the tax on the second death. The relief tapers by the year: 100% if the first death was within a year, then 80%, 60%, 40%, 20% in each subsequent year. On the IHT400 calculation it appears as a deduction from the tax, not from the estate — so it comes off after the 40% (or 36%) has been applied, lowering the final bill rather than the taxable base.
Instalment-option property
Some assets — chiefly land and buildings, a business or an interest in a business, and certain unquoted shares — qualify for the instalment option. The tax attributable to them can be paid in 10 equal annual instalments rather than all upfront (gov.uk — paying in instalments).
On the IHT400 calculation you don't just write one tax figure. The form splits the tax into:
- Tax that may NOT be paid by instalments (cash, quoted shares, most personal property) — due in full by the end of the sixth month after death.
- Tax that MAY be paid by instalments (the qualifying property) — the form apportions the total tax across the estate by value, and shows the instalment slice separately.
Interest runs on outstanding instalments for most asset types (land typically does carry interest; a genuinely trading business often does not). For Margaret, all assets are cash, investments and a home she's leaving outright — so there's no instalment property and the full £92,000 falls into the "not by instalments" column, due within six months.
Imagine instead Margaret owned a £300,000 buy-to-let alongside the rest. The IHT400 calculation would take the total tax, work out what proportion of the net estate the property represents, and label that slice as instalment-option tax. If, say, the property carried £40,000 of the total tax, the executor could pay that £40,000 over 10 years (£4,000/year plus interest), while the rest of the bill stayed due within six months.
- The IHT400 calculation always runs in the same order: gross estate → deduct liabilities/exemptions/reliefs → deduct nil rate bands → multiply the remainder by the rate.
- For 2025–26 the bands are £325,000 NRB and up to £175,000 RNRB; the standard rate is 40%.
- A transferred nil rate band (IHT402) is claimed as a percentage of the first spouse's unused band, applied to today's NRB — it stacks as a second relief and can dramatically cut the taxable figure.
- The 36% reduced rate applies only if 10%+ of the net estate goes to charity; it lowers tax but the charitable gift still leaves the estate.
- Successive charges relief comes off the tax, not the estate; instalment-option property (land, business, certain shares) lets the executor spread part of the bill over 10 years.
- Always confirm thresholds for the exact tax year of death — the NRB freeze and RNRB taper both have moving parts.
Frequently asked questions
Do I have to use the IHT400 Calculation form, or can I use the simpler version?
If there is tax to pay you need to work out the figure precisely. Many estates can use the shorter "reduced" calculation on page 11 of IHT400 itself, but the separate IHT400 Calculation booklet is needed where you're applying reliefs, instalments, or want to check the number exactly. HMRC publishes both alongside the main form on gov.uk.
Why does my estate's tax come to 40% of less than the full estate?
Because the 40% only applies to the taxable amount — what's left after deducting liabilities, exemptions, reliefs, the nil rate band, any transferred nil rate band and the residence nil rate band. In our example a £790,000 estate had £230,000 taxable, so 40% of £230,000 = £92,000, not 40% of £790,000.
How is the transferred nil rate band calculated on IHT402?
You take the percentage of the first spouse's or civil partner's nil rate band that was unused at their death, then apply that percentage to the nil rate band in force when the second person dies. So 43% unused × £325,000 = £140,000 of extra band. The maximum you can transfer is 100% of one additional band.
How much do I have to leave to charity to get the 36% rate?
At least 10% of the "net value" of the estate — broadly the estate after liabilities, exemptions, reliefs and the available nil rate band, but before the charity gift itself. Meet the 10% test and the entire taxable amount is charged at 36% rather than 40%.
What property can I pay inheritance tax on in instalments?
Mainly land and buildings, a business or an interest in a business, and certain unquoted shares. The tax attributable to those assets can be paid in 10 equal annual instalments. Interest usually applies to most categories (a genuinely trading business is the common exception).
When is the tax actually due?
Inheritance tax is generally due by the end of the sixth month after the month of death, and HMRC won't issue the probate code until at least the non-instalment tax is paid or arranged. Instalment-option tax can be spread over 10 years. Interest accrues on anything paid late.
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