We've created this tool to help you work out the size of the Inheritance Tax (IHT) bill you could leave behind when you die. It also shows how your IHT bill could increase as your wealth grows. This can help you future proof your IHT planning, giving you more certainty that your loved ones wont have to worry about it.
Terms and conditions apply
Based on your total wealth of £0 today, then in the event of your death your potential IHT bill could be:
However, by the time you're xx, your wealth may have grown to £xxx,xxx. This means your IHT bill could also have grown to:
So that's an increase in your wealth of xxx%, and an increase in your IHT bill of xxx%.
Getting cover for your potential IHT bill means your loved ones will not have to worry about selling off any assets like the family home when you die. So it gives both you and your loved ones peace of mind when you're gone.
But it is also important to think ahead so you can protect your estate against IHT both now and in the future as your wealth grows. To future proof your IHT plans there are a number of things you could do:
The figures calculated here are only estimates of your current and future IHT bill based on the information provided and the assumptions stated. You should seek independent professional financial advice when calculating what cover you need.
PruProtect only provides Life Cover to those aged between 18 and 75 at the time of taking out cover.
We offer Life Cover on both a Whole of Life and Term basis. Term cover is only available up to 40 years.
The nil-rate band is the amount below which your estate will not pay any inheritance tax, and is currently set at £325,000 for individuals (frozen until April 2018). Any large gifts that you have made over £3000 will stay ‘on the clock’ for seven years and effectively reduce your available nil rate band during this period.
Any estate will then be charged inheritance tax at a rate of 40% on all taxable assets above this amount. E.g. If your estate is worth £400,000, you will pay £40% tax on the £75,000 (=£400,000-£325,000) that is above your nil-rate band. So in this case, £30,000 (=£75,000 x 40%)will be paid in inheritance tax.
If you leave all of your wealth to your spouse or Registered Civil Partner (RCP), then providing they are UK domiciled there will be no inheritance tax is payable. A lower spouse exemption applies to gifts to non UK domiciled spouses. Using the spouse exemption means that some or all of your individual nil-rate allowance is un-used. HMRC allow you to transfer any unused nil-rate allowance to a spouse or RCP, so on current rates this means that when they die their nil-rate band could potentially be £650,000.
Leaving assets to unmarried partners or children does not qualify for any IHT relief.
Please note that you should always seek advice when calculating how much your nil-rate band is, as it may vary depending on your individual circumstances and plans for your estate.
If you opt to leave more than 10% of your 'baseline' estate to charity, then HMRC will reduce the inheritance tax rate it will charge your estate from 40% to 36%. 'Baseline' estate is the value of your estate remaining after deducting your nil-rate band. So if you have an estate of £500,000 and a nil-rate band of £325,000, then your baseline estate will be £175,000. Normally the inheritance tax bill will be £70,000 (=£175,000 x 40%).
If however you opt to give 10% or more of your 'baseline' estate to charity, then your IHT rate will fall to 36%. That means at least a £17,500 donation to charity in this case. By applying 36% to your residual estate, after deducting both the nil-rate band and charity donation, then in this case the IHT bill will be £56,700 (= £500,000 - £325,000 - £17,500 = £157,500 x 36%). That's a reduction in the IHT bill of £13,300.
If you select the option to leave at least 10% of your estate to charity, the calculator will work out how much inheritance tax you will pay assuming you give 10% of your 'baseline' estate to charity.
Please note that you should always seek advice when calculating how much your inheritance tax rate is, as it may vary depending on your individual circumstances and plans for your estate.
Here are some other things we have not taken into account in these illustrations: