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Methodology & assumptions

Last updated: 1 November 2026. This page explains exactly how every figure is calculated, what is built in, and where the model is a deliberate simplification.

1. Inputs & conventions

• Your assets, your circumstances and your planning inputs come from the ASSETS, ASSUMPTIONS, RETIREMENT and other sections of your JSON file. Every tax figure comes from the app’s own rule set instead — tax law is the same for everyone, so a statutory figure written into your file is ignored. #10 lists them.
• Currency is GBP, rounded to the nearest £1 for display. Dates are stored ISO (YYYY-MM-DD) and displayed as DD/MM/YYYY. A date bound to a date-picker keeps its ISO form, which is that control’s storage format and is shown to you in your own locale.
• Growth and inflation compound annually. The future-value / present-value maths mirrors Excel’s FV/PV (payments at period end).

2. Wealth projection (year-by-year, nominal £)

From your current age to your planning horizon, each pot (personal, pensions, company cash, property) compounds one year at a time.

• Accumulation (before retirement): pots grow at the growth rate; annual personal saving and retained company cash are added; a one-off pension top-up lands in year 0. Where Reduce your bill models regular gifts out of income, each year’s payments leave the estate as they are paid — before and after retirement alike — and whether they are exempt is a separate question, set out in #12. Where one of you stops years before the other, see the known gaps in #9 for what the years between assume.
• What you spend in retirement comes from the Budget tab, year by year. A spending line may state the month it starts and the month it ends — university fees, a car finance deal — and each year of the projection is charged only for the lines running in it. A line paid weekly, monthly or quarterly is paid through the year, so a part year costs the months it covers. A line paid annually is billed on the month it starts — the only billing month the file states — so a year that never reaches that month costs nothing, and a run of four academic years costs four bills rather than the forty-six twelfths an even spread would give. An annual line with no start month has nothing to say when it is billed, so it is spread. A line marked as continuing carries on until its end date whether or not you have retired; a line marked as stopping stops when you retire. The figure on the Budget tab is what the first full year of retirement costs, and the Retirement tab’s slider adjusts every year up or down from there rather than setting one figure. Where the budget cannot be counted — a line the app cannot read, or a date of birth it cannot read — the hand-set figure in your file stands instead, and the Budget tab says so.
• Drawdown (from retirement): spend, rent and State Pension inflate each year. The spending figure you state is take-home — what lands in your account and can be spent, so every source of money is counted after the tax on it. The State Pension, any final-salary pension and rent (once you have stated it before tax on Retirement assumptions) are all taxable income, taxed together at the same rates, and counted net (the separate property rates announced in Budget 2026 for rent from 6 April 2027 are not yet law and not modelled; see #9); a file that has not yet stated a before-tax rent still has its old after-tax figure taken as given. What is left is funded by drawing personal savings first, then pensions, then company cash, and a pension withdrawal is grossed up so that what reaches you is the figure you asked for — to hand you £3,000 a month the drawdown has to pull more than £3,000. A quarter of each withdrawal is tax-free until the lifetime lump sum allowance is used, after which the whole of it is taxed. The order matters because of this: an ISA pound really is a pound, so spending cash before pension costs you less.
• How long the money has to last is worked out, not guessed. It is the single biggest swing on this tab, so the app sets it from the ONS mortality projection (2022-based, Open Government Licence v3.0) rather than asking you to pick a number. Two things about how:
  • Cohort, not period. A period table prices your old age at today’s death rates at every age, which ignores the improvement expected over your lifetime and plans you short. A cohort follows one group of people through time. Where ONS publishes a cohort directly it is used as published; for earlier cohorts the same projection’s period rates are walked along the diagonal, which is how a cohort table is built. The two agree rate for rate wherever both cover a year, and a test holds them against each other. The period grid stops at one calendar year while ONS’s published cohorts run on to age 100, so where a diagonal walk reaches that year it continues on the nearest published cohort rather than stopping. Those are ONS’s own rates, not an extrapolation; a cohort born a little earlier reaches each age a little earlier, so its true rates are slightly higher and borrowing plans slightly further rather than less far. Without it, one birthday moved the planning age by six years at the 1981 join.
  • One in four, not the average. Planning to average life expectancy means running out of money in half of all futures. This plans to the age about a quarter of people of your age and sex still reach — in the low-to-mid nineties for someone retiring today, against a median in the mid-eighties. Cautious without being extreme, and you can change it.
  Where the table runs out of ages before a quarter have died, the age is capped at the oldest it covers and the page says so; it is never extrapolated. Sex is used for this and for nothing else, and it never leaves your device. This is not a prediction of how long you will live — it is how long a plan should be asked to last.
• The answer is a band, never one figure. Everything on the Retirement tab depends on an assumed rate of growth, and nobody can guarantee one. So the tab runs the same plan at three growth rates and shows the range they produce: the FCA’s own intermediate rate of 5% a year with 2% inflation, and a low and a high set mechanically at three points either side — 2%, 5% and 8% a year before inflation. Those nominal rates are run exactly as they stand, whatever inflation you set; the Retirement tab prints each one after your inflation assumption, which at the FCA’s own 2% is 0%, 2.9% and 5.9% (COBS 13 Annex 2, para 2.3, which carries both the rate caps and the ±3 flanking rule). The intermediate rate derives from a base portfolio of 60% equities, 20% gilts, 10% corporate bonds, 7% property and 3% cash. The three illustrate a range of possible outcomes and are not a forecast: the FCA attaches no probability to any of them, and neither does this app. If you want the odds rather than the range, that is a different kind of model and this is not it.
• Income you do not spend is saved. In a year where rent, State Pensions and final-salary income together come to more than you spend, the difference after the tax on it is added to your savings and compounds from there. It used to go nowhere at all — the withdrawal was correctly floored at zero, but there was no branch for the opposite case, so the money left no trace. That never showed as a wrong “will it last?” answer, because the pot did last; it showed as an understated estate and so an understated tax bill.
• Every yearly amount you state is in today’s money. Saving, retained company cash and the gift from income all rise with inflation, exactly as the spend, the rent and the State Pension do. Say you save £20,000 a year and the tool pays in more cash each year so that it keeps buying the same. This is a change: saving used to go in as a flat cash amount while the spending it was saving for inflated, which understated the pot on both charts and disagreed with the affordability panel. A final-salary pension is the one exception — it escalates at its own scheme rate, which is the point of recording that rate.
• The year you turn your retirement age is your first retired year: no saving that year, and spending starts. If your retirement age is already behind you, this year is a drawing year and the tool plans for the spending still to come — today to life expectancy. It does not ask you to fund again the years you have already lived through. The projection, the cashflow view and the affordability verdict all count it the same way.
• The first point on either chart takes no growth, so the line starts from the wealth you hold today rather than a year of it forecast. If your retirement age is behind you it does carry this year’s spending, because you are spending that money now.
• Property grows at its own rate and is never drawn down for spending.
• IHT bands are held flat in nominal terms for the whole projection, so a growing estate against fixed bands pushes the IHT line up over time. Be clear about what that is: the freeze is legislated only to 5 April 2031 (#10). Beyond that date this tool assumes the freeze keeps being extended. That is a prudent planning stance, not the statutory position — see the note in #10.

3. Retirement readiness (real, today’s £)

Uses a real rate of return (Fisher equation) to express everything in today’s money:

The pot required is the present value of the spending stream to your planning age, worked out one year at a time and added up — never as a single level annuity. Each year is valued at what that year actually costs: your spending for that year, less your rent and less the State Pension and any final-salary scheme income each of you is actually paid that year. A scheme reduces what the pot has to provide without ever being part of it.

On the same take-home basis as the charts. The spending figure you state is what lands in your account, so every income set against it is counted after its tax — the State Pension, a scheme pension and rent taxed together at the same rates, each on its own recipient’s record, with the higher property rates announced in Budget 2026 not yet law and not modelled (see #9) — and what is left for the pot to find is then grossed up for the income tax on drawing it. Until September 2026 this figure alone was on a before-tax basis while both charts beside it were not, so it told you that you needed less than you need.

It assumes your tax-free cash is gone. This figure cannot know which pot a pound will come out of, nor how much of your lifetime lump sum allowance the plan will already have used by the year in question, so it grosses every pound up as fully taxable pension income. That is deliberately the cautious reading: it states a higher requirement than you are likely to face, and the year-by-year cashflow on the Retirement tab — which does know the order the pots are drawn in and does count the tax-free quarter — is the figure to plan against. That cashflow assumes each of you still has the whole lump sum allowance, because your file records no tax-free cash already taken (see the known gaps below).

The pot it is compared with is your personal savings, your pensions and retained company cash; both properties are excluded. Whether the plan is affordable is decided by that cashflow, not by this comparison, because a pot being large enough and the money being reachable in the year you need it are two different questions — a pension cannot be paid before your normal minimum pension age however big it is. A safe-withdrawal-rate figure on the 4% rule is computed but is not shown on any screen, so do not go looking for it.

4. Inheritance tax (IHT)

• n is the number of nil-rate bands. Second death = 2 (both spouses’ bands transfer); a single estate, or each estate when both die together = 1.
• RNRB taper: the residence band is reduced by £1 for every £2 the estate exceeds £2,000,000. It is fully extinguished at £2,700,000 where two residence bands apply (second death), and at £2,350,000 where only one does (a single estate, or each estate when both die together). The £2m taper test uses the gross estate (before reliefs).
• What the RNRB requires in law: a qualifying residential interest — a residential property interest in the estate at death, and there can only ever be one — that is closely inherited by a lineal descendant. The downsizing addition (IHTA 1984 ss.8FA–8FE) can preserve the band where a home was sold or downsized on or after 8 July 2015. The band available is capped at the value of that residence (IHTA 1984 ss.8D–8M; HMRC IHTM46001). What this tool does with those conditions is set out once, in the gap list in #9 — in short, it tests both, grants no residence band at all until they are answered, and does not model the downsizing addition.
• Debts are deducted. Inheritance tax is charged on what you own less what you owe: IHTA 1984 s.5(3) — “in determining the value of a person’s estate at any time his liabilities at that time shall be taken into account”. That makes a liability part of the definition of estate value, not an adjustment made afterwards, so every debt in your file comes off the estate before the £2m taper test as well as before the charge (IHTM46023, quoted below). A large enough mortgage can therefore hand back residence band the taper had withdrawn. An offset mortgage is deducted in full, and the savings held against it are counted as an asset in their own right. The two treatments — deducting the whole balance with the savings listed, or deducting only the excess with them unlisted — give the same tax; what decides which is correct is whether those savings appear as an asset row. They do, so the gross basis is the one that matches this file. It is also the only basis that gets the residence band right: that band is capped at the home’s value net of the mortgage charged on it (s.162(4) below), and a mortgage netted away to nothing cannot reduce that cap. If an offset mortgage is ever recorded without its savings among the assets, the estate is understated by the whole offsetting balance — see the offset warning the app raises on Your Estate. The offset is applied only to rows whose type says offset: the second amount recorded against a credit card or car finance is a limit or a monthly payment, not an offset. A debt recorded as a negative amount is ignored rather than added.
• Statutory defaults: NRB £325,000, RNRB £175,000 per person, 40% rate — frozen to 5 April 2031 by s.86 Finance Act 2021, as successively extended — its heading now reads “Rate bands etc for tax years 2021-22 to 2030-31” — which disapplies the indexation provisions in IHTA 1984 s.8 and s.8D for those years. See #10.

5. Business & Agricultural Property Relief (April-2026 rules)

Assets you tag (on the Maintain-data tab) as Business relief or Agricultural relief are modelled under the rules effective from 6 April 2026:

• 100%-class assets (unquoted trading businesses, qualifying farmland) share a single £2,500,000 allowance per person. Value up to the allowance is 100% relieved; value above it gets 50% relief.
• 50%-class assets (e.g. AIM / quoted minority holdings — tag them “(50%)”) always get 50% relief and never draw on the £2.5m allowance.
• The relieved assets still pass to your heirs in full — relief only removes the tax on them.
• The Apply Business/Agricultural relief toggle lets you see the bill with and without relief.

6. Pensions and IHT

Unused pension funds currently sit outside the taxable estate and pass to nominated beneficiaries. For deaths on or after 6 April 2027, most unused pension funds and pension death benefits fall inside the estate (Finance Act 2026). The Current rules / New rules switch on the Overview chooses between the two bases, and it is one snapshot for the whole app: nobody can predict how long you will live, so the app shows a snapshot of the liability, and the switch shows what happens from 6 April 2027 onwards if there is a pension. On current rules, unused pension funds sit outside the estate in every figure on every screen, including every projected year. On the new rules they are counted in every figure on every screen, including every projected year. The app opens on the rules in force on today’s date: before 6 April 2027 it opens on current rules, so unused pension funds sit outside the estate by default; on or after that date it opens on the new rules, so they are counted (#236). Either way no figure follows a different rule for a different year (see #13). Once the commencement date has passed the switch is no longer offered.

• The scope is broader than “defined contribution”: some defined-benefit lump sums are caught, while death-in-service benefits payable from a registered pension scheme and dependants’ scheme pensions from defined-benefit or collective money-purchase arrangements are excluded. This tool models neither exclusion — if your file includes death-in-service cover as a pension asset, the model taxes it at 40% where in reality it is out of scope. Tracked as a defect.
• The spouse exemption applies as normal, so funds passing to a spouse are exempt on the first death and land in the survivor’s estate.
• “Pension” here means any asset row whose wrapper column reads Pension. Each such row is charged in its own owner’s estate, including where both of you die together — stated once, with its authority, in #8.

7. Gifting & the 7-year rule

• Normal expenditure out of income — no cash limit and no seven-year clock, but not unconditional when a payment is made (IHTA 1984 s.21). All three tests must be shown: the gift was part of your normal expenditure (a regular pattern), it was made out of income taking one year with another, and it left you with enough income to keep your usual standard of living. HMRC decides after death, from the records your executors send on form IHT403. If death comes before a pattern is established, the payments can be treated as ordinary gifts instead (HMRC IHTM14231, IHTM14241, IHTM14242, IHTM14250, IHTM14255).
• Annual exemption — £3,000 per donor per tax year (IHTA 1984 s.19). It is applied to the earliest transfer of the year first, and it does not matter whether that transfer is a PET or immediately chargeable — the exemption is automatic, not something you can hold back for a later gift (HMRC IHTM14143). This tool counts every capital gift against it, PETs included; gifts out of income are excluded, because s.21 is a separate exemption. Unused exemption carries forward one year only, and the current year’s must be used before the brought-forward amount. A surplus that survives the following year is lost, not banked (HMRC IHTM14144). The tool tracks this per donor, not as a shared couple pot. On carry-forward it reports two figures rather than guessing, because it cannot tell “made no gifts last year” from “did not log last year”, and the two possible errors are not equal: overstate your headroom and you make a gift that quietly becomes a PET with a seven-year survival condition attached; understate it and you have only to check last year’s records. So the headline figure counts only carry-forward it can evidence from logged gifts, and any further amount is offered beneath it as “up to £X more may be available if you both made no gifts in that year” — naming the specific person where only one of you has an unlogged year. For the same reason it flags an amount as over the allowance only when the most generous reading is still breached — it will not tell you that you have created a PET when a carry-forward you hold would have covered it.
• Small gifts — £250 per recipient per tax year (IHTA 1984 s.20), and it is all-or-nothing: if total gifts to one person exceed £250 in the year the exemption is lost entirely for that person, not applied to the first £250. It cannot be combined with the annual exemption for the same recipient (HMRC IHTM14180). The tool enforces both rules. Totals above £250 to one recipient in a tax year, and any pairing with the annual exemption for the same recipient, collapse the gift to a PET — measured on the total of all small gifts to that person that year, never on a single row, so two £150 gifts fail together.
• PETs (potentially exempt transfers) — remain in the estate until they survive 7 years. Taper relief reduces the tax, not the value transferred, and only bites where the gift exceeds the nil-rate band, because a gift covered by the band bears no tax to taper (IHTA 1984 s.7(4); HMRC IHTM14612).
• Junior ISA payments — a payment into a child’s Junior ISA is a gift to the child, made the moment it lands, and the wrapper does nothing for IHT. HMRC looks at the transfer, not the account it went into: it is exempt only where s.21, s.19 or s.20 covers it, and is otherwise an ordinary PET carrying the full seven-year clock (IHTA 1984 s.3A). Three facts about the wrapper itself, none of them tax-relieving. Anyone may subscribe — parent, grandparent, friend — while only someone with parental responsibility may open and manage the account. The limit is £9,000 per child per tax year, and it caps the child’s account rather than each giver, so two parents share one £9,000 between them instead of having £9,000 each; cash and stocks-and-shares JISAs draw on the same figure. And the money belongs to the child, is locked until 18 and cannot come back — so it leaves your estate as a matter of ownership on day one, whatever the IHT position of the gift turns out to be. That last point is why the funding route matters more here than the account does: £9,000 exceeds two donors’ combined £3,000 annual exemptions, so a JISA funded from capital leaves a PET behind every year, while the same payments made habitually out of surplus income can be exempt in full under s.21, with no seven-year clock, if they meet its three tests. This tool has no Junior ISA concept. A JISA payment reaches the calculation only as a gift row you log like any other, naming the exemption you are claiming; leave it out and neither the seven-year clock nor the annual-exemption tally knows it happened. (GOV.UK — paying into a Junior ISA)

8. Inheritance scenarios (“what reaches your heirs”)

Two separate things are at work in every scenario, and it is worth keeping them apart. The nil-rate bands (#4) are a slice of any estate that is taxed at 0%. The business and agricultural property relief allowance (#5) is something different: it applies only to assets you have tagged as qualifying business or farm property, and it reduces the tax on those assets specifically. They are counted separately, they cover different things, and neither is drawn from the other. Relief is applied first, reducing the value of the qualifying assets; the nil-rate bands are then set against whatever chargeable estate remains. So a fully relieved business does not consume any part of your bands — but note the sting in #4: the £2m residence-band taper is measured on the estate before relief, so a large relieved holding can still withdraw your residence band entirely. The table below gives each scenario’s figure for both.

• Second death is where the bill usually lands: it is the first point at which a combined estate meets a single set of heirs.
• Both dying together is modelled with nothing transferring between the two estates, so each falls back on its own single set of bands and its own single relief allowance. That is this tool’s cautious choice, not HMRC’s view of the nil-rate band (see the box at the foot of #9). Each pension is charged in its own owner’s estate, not pooled and charged to one of you: s.4(1) charges each person on the value of their own estate, and HMRC’s IHTM12195 confirms that s.4(2) “does not affect the devolution of the estates” and that its effect “is considered separately in relation to the deaths of each of the younger and the elder”. Joint assets are split 50/50. Whether that is the right treatment turns on whether your wills contain a survivorship clause, and HMRC’s own view of the nil-rate band is different from this tool’s; see the note at the end of #9.
• Life cover written in trust passes outside the taxable estate. So do unused pension funds on current rules; on the new rules from 6 April 2027 they are counted in it (per #6).

The Beneficiaries tab splits what reaches your heirs three ways. Tax caused by your pensions is charged to the pensions, because from 6 April 2027 the personal representatives may require the scheme to pay it from the fund (IHTA 1984 s.226B) and tax attributable to property that does not vest in them is not an expense of the estate and must be repaid by whoever receives it (IHTA 1984 s.211). Budget 2026 (28 October 2026) announced that a prospective personal representative will also be able to direct the scheme to pay the tax, when certain conditions are met; that is not yet law (OOTLAR 1.27). It changes who may ask the scheme to pay, not which part of the estate bears the tax. The law gives no formula for 'attributable'; HMRC's outline apportions the tax on the whole estate between its parts in proportion, so the app does the same and says it is an assumption. Tax on gifts that failed is owed first by the people who received them (IHTA 1984 s.199; s.204), so it is shown as theirs and not taken from your Will; only the extra tax a gift causes by using up the nil-rate band falls on the estate. A pension left to a spouse is exempt (IHTA 1984 s.18) and bears none.

9. Known simplifications and known gaps

These are two different things and this page keeps them apart. A simplification is a deliberate decision about what the tool models. A gap is a place where the tool does not yet follow UK law, and every one of them is tracked as a defect to be fixed.

Deliberate simplifications

• Income tax on pension withdrawals is modelled, at the rates of the rest of the UK. A Scottish taxpayer pays Scottish rates on pension income and this app holds no residence for you, so it uses the rest-of-UK rates. Each of you is charged on your own income. A final-salary pension is paid to its member and a State Pension is paid on your own record, so neither can be moved between you, and this app charges each of them to the person who receives it — using that person’s own allowance and their own basic-rate band. It does not pool your incomes and halve them: doing that buys a second allowance the law does not give, and the error was largest for a household with one big pension and one small one. A pension withdrawal is charged the same way. Your file records whose pension pot is whose, so a withdrawal is divided between you in proportion to the two pots and each share is taxed on that person’s own allowance, own basic-rate band and own lump sum allowance. Neither of you can spend the other’s. A household whose pension is all in one name therefore gets one set, which is what the law gives it. The Pension Tax Allowance is not modelled. Announced at Budget 2025 and listed again in Budget 2026 for Finance Bill 2026-27, it is not yet law (OOTLAR 1.4; the thresholds are in Annex A). For the three tax years from 6 April 2027 it would take a pensioner whose total income is no more than the full new State Pension out of income tax, and taper away just above that. Once it is enacted, the app would overstate the tax for anyone in that band. What is still an assumption is that you draw from the two pots in proportion to their size every year: a household that emptied one pot first would meet the bands in a different order, and no field in your file says which. A pension row whose owner this app cannot recognise is left out of every figure and flagged on screen, rather than being split between you. Your rent does count towards your bands, where your file states it before its own tax: it takes the personal allowance and the basic-rate band ahead of any pension withdrawal and counts towards the £100,000 allowance taper, as it does in law. It is split evenly between you for that purpose — whose rent it is decides whose income a gift can come out of, and nothing else. An older file stating only a rent already net of its own tax is left exactly where it was: that figure reaches no band, which understates the tax, by more the more rent there is. Rent is taxed at the same rates as a pension. Budget 2026 announced that from 6 April 2027 property income will have rates of its own, 24%, 44% and 49% (OOTLAR 1.2; Annex A). That is not yet law and is not modelled, so once it is enacted the app would understate the tax on rent from that date. The years after the first death are not shown on any screen. The calculation exists and is tested — the survivor charged as one person with one personal allowance and one lump sum allowance, none of the deceased’s allowance passing to them, and credited with their own State Pension only — but nothing in the app sets an age for it, so every Retirement figure assumes both of you are alive throughout, as the tab says. Which way that errs is not known: spending would fall, but a pension would fall further and one personal allowance would be lost. Not modelled: dividend tax, tax on savings interest, capital gains tax on growth, tax on extracting company cash, and the marriage allowance. Budget 2026 also announced savings rates of 24%, 44% and 49% from 6 April 2027 (OOTLAR 1.1); that is not yet law, and since no tax on savings interest is modelled at all, it changes nothing here.
• No variable-withdrawal strategies, and no modelling of market volatility as an ongoing process. No market crash is modelled on any screen. The calculation can apply a one-off fall to the personal and pension pots in the retirement year, but nothing in the app sets one. What the Retirement tab shows instead is the plan at three fixed growth rates, which is a range and not a crash: a fall early in retirement does more harm than the same average return spread evenly. Leaving it out flatters the verdict.
• Care costs and a survivor’s reduced spend (70%) are not modelled on any screen. The calculation holds both, for a case nothing in the app sets, so every figure assumes no care costs and both of you alive and spending at the full rate. Leaving care out flatters the verdict; leaving the survivor’s lower spend out errs the other way.
• No Scottish-specific variations. The reduced rate for a charitable legacy is modelled, on Reduce your bill only — see #12. A gift you still benefit from is not modelled either, and that one is no tidy simplification: see Not modelled at the foot of this page, which says which way it moves your bill.
• In the year-by-year projection, relief-eligible assets are grown at the general investment rate rather than at a rate appropriate to farmland or a private business.
• Debts are held flat across the projection, at today’s balances. Your file records balances, not repayment schedules, so amortising them would mean inventing one. A debt you are in fact repaying is therefore overstated in later years, which understates the estate and understates the bill.
• Beyond 5 April 2031 the projection holds the nil-rate bands flat rather than indexing them. See #10 — this is an assumption, and a prudent one, but not the statutory default.

One tax engine

Every inheritance-tax figure in this app — the Overview headline, the year-by-year projection, the Inheritance tab and the gifting-impact figures — is computed by one function on one basis, and reads one shared pair of relief and pension settings. What is actually tested: the Overview headline, the projection at today’s values and the Inheritance tab’s second-death row are asserted equal in every combination of those two settings, in a browser, against a fixture estate; and the projection’s tax line is checked against a calculation derived independently from statute for sample years. That is a statement about internal consistency, not about being right — the limits below still apply to all of them at once.

• The estate is tested immediately before death, before reliefs and exemptions (IHTA 1984 s.8D(5)). Business- and agricultural-relief assets therefore sit in the £2m residence-band taper test at their gross value, even though relief later lifts them out of the charge.
• A pension outside the estate was never estate property, so it is in neither the charge nor the taper test until you choose the new rules from 6 April 2027 (Autumn Budget 2024) on the Overview switch, which then counts them in every figure.
• Life cover written in trust is trust property (IHTA 1984 s.43–44) and appears in neither the charge nor the taper test. A death benefit NOT written in trust is paid to the estate and appears in both (s.4(1)) — in the year-by-year projection as well, filtered by each year’s own modelled death date, so a term policy that has lapsed by the year being modelled adds nothing.
• Which rows are counted, and which are not placed. A row tagged In estate, Spouse-exempt or a relief status is counted in the estate; a row tagged Outside estate is left out, by design. A row the app cannot place — an owner it does not recognise, a status that is not on the list, a wrapper that is not None, ISA, Pension or GIA, or a pension category whose wrapper is not Pension — reaches no bucket and so no tax figure, yet it still counts in the gross total of your file. Each is named in a banner on screen, because its absence understates the bill.
• “Passing to my spouse” is recorded, and the tax counts it anyway. A holding marked Spouse-exempt is counted in the estate, because this tool charges the tax on the second death, when what passed to your spouse is part of the survivor’s estate: IHTA 1984 s.18 exempts it at the first death only (ADR 0013). That is the cautious direction for the bill. The first-death view already treats everything passing to a spouse as exempt, for the estate as a whole rather than row by row, so the status moves nothing there. A file saved under the old treatment, where such a row counted in what you own but reached no bill, now shows a higher estate and a higher bill. That is the correction arriving, not a fault in your file.
• Failed lifetime gifts are not estate property. They consume the donor’s own nil-rate band oldest-first (IHTM14611) and carry their own tapered tax; they are never also added to the estate.
• Company value (FORECAST.company_cash) is modelled as a 100%-class business-relief asset drawing on the same £2.5m allowance as every other one. It is not lifted out uncapped, and it is not charged in full.
• The projection carries two estate lines, deliberately. Total estate you hold is living wealth — the pots drawn down for spending, excluding any death benefit, which does not exist until the death being modelled. Estate at death, after IHT is what the bill was charged on less that bill: the same wealth plus in-force cover not written in trust. Deducting a bill charged on wealth-plus-cover from wealth alone would understate what is left by the whole benefit, so the dashed line can sit above the solid one.
• The pension switch is one snapshot basis, not a date that moves from row to row: every projected year is charged with unused pension funds outside the estate (current rules) or inside it (new rules from 6 April 2027), as the Overview switch says, and the same words are printed beside the bill on each screen. No year follows a different rule from the one chosen.

What the single engine does NOT settle

• Company value is relieved as 100%-class business property with no excepted-asset test (IHTA 1984 s.110/s.112, IHTM25341). Cash held beyond the business’s reasonable needs is an excepted asset and does not qualify; nothing here tests that, so relief may be overstated. Raised separately.
• The projection’s after-tax line is not a “reaching your heirs” figure. Cover written in trust is outside the estate (IHTA 1984 s.43–44), so it is correctly absent from the tax — but it is also absent from “estate at death, after IHT”, which the Inheritance tab’s “Reaching your heirs” does include. That is a coverage limit on the heirs figure, not a tax one: the two answer different questions and are named accordingly, and the gap between them is exactly the in-trust cover on every solvent file that records no one-off pension top-up. Where a one-off top-up is recorded, the projection applies it straight away and the “reaching your heirs” figure does not — the first is modelling the plan, the second is asking what would happen if you died today — so the two describe the same moment from different pension pots and the gap narrows by that contribution. Which of the two should change is an open question, recorded as defect 411. Where debts exceed everything owned, both figures floor at nothing and the gap closes to the in-trust cover plus any pension outside the estate — both of which survive an insolvency the estate itself does not. Cover NOT written in trust is estate property, and is in the tax and the after-tax line of both.
• Relief assets are not drawn down. In late retirement the pots can be spent below the value of the business still being relieved, so those years relieve more than the estate holds.
• “Both die together” is today’s values only — it is not projected forward, so it cannot be compared with a later year of the chart.

5. Marital status, pensions you can and cannot draw, and final-salary schemes

Three things the tool models that this page did not previously describe at all.

Marital status decides whether the allowances double. It is recorded in your file, not assumed. Married or in a civil partnership gives two of each allowance, because the nil-rate band, the residence band and the £2,500,000 business allowance all transfer to the survivor. Single and divorced each give one set, and there is a single death rather than three death-order scenarios — nothing transfers from a former spouse, because the claim requires you to have been married to them immediately before their death.

Widowed gives one set plus whatever your late spouse left unused. That transfers as a percentage of each of their allowances, claimed separately: the nil-rate band under IHTA 1984 s.8A, the residence band under s.8G, and the £2,500,000 business allowance under s.124E from 6 April 2026. The three can differ — a death before 6 April 2017 predates the residence band, and one before 6 April 2026 predates the business allowance, so neither could have been used. Anything left to a surviving spouse is exempt and spends no allowance, so where your file says nothing this app assumes all of it transferred, and says so on every screen. That assumption errs towards a LOWER bill, which is the opposite direction from every other default here — so if part of your late spouse’s estate went to somebody else, state the percentages on You & your spouse.

Where a figure cannot be read, nothing is worked out from it. If a cell this projection needs is empty, or holds something that is not a number, the Retirement tab says so and names the figure — it does not fall back to a default, and it does not show you a verdict. A tick means the arithmetic ran; a ⚠ means it could not. The two are never shown in the same way, and no figure appears beside the second.

The minimum pension age is the earliest a pension may be drawn: 55, rising to 57 on 6 April 2028 (Finance Act 2004 s.279(1), as substituted by Finance Act 2022 s.10(2)). It is not a floor on retiring. Nobody can stop you retiring earlier; what it governs is when a pension pot becomes spendable. So it drives a liquidity question — can the money you can actually reach carry you from the day you stop earning to the day the pension unlocks? — and never an eligibility one. A protected pension age, where scheme rules gave an earlier right, is not modelled: that is a fact about your scheme, not about the law. The projection holds each pension shut until the start of the calendar year in which its owner reaches the unlock age, not on the day. A pot that unlocks in June is spent from in January, so up to eleven months of a year are paid for out of money that is still shut; for a couple, the second person’s date is converted into the first person’s years and rounded down, which can add up to about another year. That errs toward the taxpayer: the shortfall is understated and the money runs out later on paper than it would (#167). Before that year the projection reports what the money you can reach cannot cover as a shortfall, rather than paying for the gap out of the locked pot. The date is worked out from your date of birth and not from today, because the age in force is the one applying on the day benefits are taken — somebody who turns 55 after 5 April 2028 waits until 57. Where two of you are modelled, each pot opens on its own owner’s date: the payment conditions are conditions on the member, so neither of you is kept out of your own pot while the other catches up. There is no separate household figure sized to the later of the two dates: until a pot opens it simply cannot be spent, and what the rest of the money cannot cover in those years is the shortfall described above. The Retirement tab’s line on which money pays first counts the years to your own unlock age.

A final-salary scheme is income, not an asset. There is no pot with a value. It starts at an age, rises each year, continues for life and pays a percentage to a survivor. It appears in no estate figure at all: the income is a right against the scheme rather than property of the deceased, so it is outside the charge, and the April-2027 change to unused pension funds does not reach it either. A scheme’s normal pension age is set by the scheme and is a different number from the statutory minimum above; both are needed and they are not interchangeable.

Known gaps — the tool does not yet do these

• A charitable legacy treats the whole estate as one component (IHTA 1984 Sch. 1A para 3). Exact at a couple’s second death on the law as it stands; Budget 2026 announced a choice, from 6 April 2027, to treat pension property as a separate component, which is not yet law and not modelled (OOTLAR 1.27; see #12). For a single or divorced person, a joint holding that passes by survivorship is a separate component a Will cannot reach; the file’s Survivorship column is not read. Where it applies, the reduced rate is extended to that share: Understates tax. See charityShareOfBaseline. Reduce your bill only (#102).
• Spare income for regular gifts is taken before income tax in retired years (IHTA 1984 s.21; HMRC IHTM14250 measures it after tax). Part of a gift the tool treats as out of income may really come from capital, and within seven years of death would be charged: Understates tax. See spareIncome. Reduce your bill only (#102).
• It cannot tell one wedding from another. The wedding cap is per giver, per wedding, and no field says which wedding a gift was for, so all marriage gifts at the same relationship share one cap. Given at more than one wedding, the tax shown is more than the law charges. (Moved here from the Gifts tab, #104.)
• It does not know where your spouse is resident. The spouse exemption is capped at the nil-rate band where you are a long-term UK resident and your spouse is not (FA 2025). Every spouse gift is treated as uncapped, so if that describes you the tax shown reads too low. (Moved here from the Gifts tab, #104.)
• The small-gift exemption is now enforced: totals above £250 to one recipient in a tax year, and any pairing with the annual exemption for the same recipient, collapse the gift to a PET for cumulation purposes (IHTM14180). The annual exemption remains tracked per donor.
• The residence band is capped at the value of the home you say passes to a child or grandchild (IHTA 1984 s.8E), and is not granted at all until you have said which property is your home and that it passes to a lineal descendant. Until then the tax shown is HIGHER than it will be. This replaced an earlier behaviour that granted the band to every estate, including one holding no home at all. An answer of Not sure is treated as No, and while it stands the screen shows beside the bill how much lower the bill would be if the home does pass to a child or grandchild.
• Which property can draw the band (IHTA 1984 s.8H; HMRC IHTM46011). A residential property interest is an interest in a dwelling-house “which has been the person’s residence at a time when the person’s estate included that … interest”. It does NOT have to be the main home, and it does not have to be the home at death: HMRC’s own example is a flat lived in previously and let out at the date of death. A property never lived in — a buy-to-let — does not qualify however large it is. Where more than one property qualifies, s.8H(4) lets the personal representatives nominate one, and only one; they cannot be added together. This app therefore asks of each property whether you have lived in it while owning it, and where more than one qualifies it claims the band against whichever gives the larger figure after the mortgage secured on that property — the choice a personal representative would make, made the same way every time and named on screen. A qualifying property recorded in more than one row is added up as one home only where it is the property you have marked as your home; a second qualifying property is measured a row at a time, which understates it where it is itself split across rows, and so errs towards more tax.
• The cap uses the home’s value NET of the mortgage secured on it (IHTA 1984 s.162(4); IHTM28210; HMRC’s IHT435 asks for the value after deducting a secured loan). A mortgage names the property it is charged on, so the band is measured on your equity rather than on the house, and each estate’s cap is its share of the property less its share of what is charged on it — the same share the bill deducts. The mortgage still comes off the estate exactly once: s.162(4) decides where a debt lands, not how many times it is deducted. Where a home is identified and no mortgage says which property it is on, the tax shown may be LOWER than it should be, and every screen asks the question until it is answered. The question is asked only of mortgages, and only where something is still owed — a credit card, car finance and a mortgage already repaid change no allowance and are never asked about.
• A loan secured on your home but raised to buy relievable property is set against the house, not against that property (IHTA 1984 s.162B, added by Finance Act 2013 Sch.36 for liabilities incurred on or after 6 April 2013). s.162(4) applies only “to the extent that it is not taken to reduce value in accordance with section 162B”, so where s.162B bites the home is not reduced at all and the residence band survives. This app reduces the home in every case. Understates tax, and the error grows with the borrowing. It is not fixable by editing your file: the format cannot say “secured on the house, borrowed for the business”, so this is an unmodelled provision rather than a missing figure. See securedByAsset.
• Whether the home passes to a descendant is one yes/no for the whole property. The law apportions: half a home to a child and half to a sibling gives half the band. And a home left to a discretionary trust for children is not “closely inherited” (s.8J), though anyone would answer yes. Both understate tax.
• A home that carries business or agricultural relief gives a smaller residence band. The band is measured on the home’s value after relief: IHTA 1984 s.8E(1) takes “so much (if any) of the value transferred by the transfer of value under section 4 on the person’s death as is attributable to the interest”, and HMRC’s IHTM46027 (“Calculating the RNRB: calculating the value of the QRI that is closely inherited”) says “the value of the QRI is its value after reliefs, but before any exemptions”. Its farmhouse example counts only the non-agricultural part. The taper test is different: it uses the estate before reliefs and exemptions (IHTM46012), as the list in #8 says. The £2.5m relief allowance is shared between properties in proportion to their value (IHTA 1984 s.124D(7)). The tool treats the whole row you tagged as relieved and shares the allowance in that proportion, using the highest number of allowances the file can have (two for a married file), which gives the lower band. Two things the law does not settle for the tool: what counts as the agricultural value of a farmhouse, and whether the company’s draw on the same allowance changes the home’s share. Both are left on the cautious side. Overstates tax where the true band is higher. See chargeableFractionOf.
• A holding passed to a spouse loses its relief; the survivor may still have it. IHTA 1984 s.108(b) treats the survivor as having owned property for any period their spouse owned it, and IHTA 1984 s.120(1)(b) says the same for agricultural property, with occupation as well. IHTA 1984 s.109 keeps relief on successive transfers where either one is a transfer on death. So the survivor can claim relief if the holding still qualifies when they die. The tool does not model that: choosing “Passing to my spouse” removes the relief status, and the holding is charged in full at the second death. Overstates tax, by at most the full rate on the holding, and by less where the nil-rate bands are not already used up. See spouseOptionFor.
• The downsizing addition is not modelled at all (IHTA 1984 s.8FA–s.8FE). If you sold or downsized a home after 8 July 2015, you may keep band you no longer appear to be entitled to. The file records no disposals, so this cannot be derived. Overstates tax.
• The brought-forward allowance is not tapered on the first death. Where the first spouse’s own estate exceeded £2,000,000, less than a full band transfers (s.8F, s.8G; IHTM46044). Where you have not stated a percentage, allowanceCountsFor assumes a whole band transfers, because nothing in the file records what each of you held separately at the first death. Stating the percentages on You & your spouse replaces the assumption; the taper itself is still yours to work out. Understates tax while the assumption stands.
• In the projection the home’s value grows with the property it is part of, at the property growth rate. A home growing faster or slower than property generally is not modelled, because the file states only one rate.
• The three conditions for “normal expenditure out of income” are not tested at all (IHTA 1984 s.21; HMRC IHTM14231, IHTM14255). The law requires all three together — that the gift formed part of your normal expenditure, that it was made out of income taking one year with another, and that it left you with enough income to maintain your usual standard of living — and the burden of showing them is yours. otherExemptions exempts a gift carrying this label in full and uncapped, on the label alone. Two of the three conditions need judgement and cannot be automated; the app now says on the Gifts screen’s exemptions table that it checks none of them, but the gift row and the totals carry no such caveat and nothing shows what the bill would be if the claim were refused. Errs toward the taxpayer wherever the claim would not stand (#199). Note what this is NOT: the £3,000 figure often quoted alongside this exemption is the excepted-estate test (IHTM06027) — above it your executors must file a full account — and is not a cap on the exemption. Capping the engine at £3,000 would overstate the bill for anyone genuinely giving more than that out of surplus income.
• Two gifts made on the SAME DAY split the nil-rate band sequentially, not pro rata (IHTA 1984 s.266(2)). Where one person makes more than one chargeable transfer on a single day, the section charges them at one effective rate — which in band terms is an equal apportionment. cumulateFailedPets gives the band to whichever gift the file lists first, so the first shows no cost and the second carries the whole charge. The bill is not affected: same day means the same taper, so the total is identical however the band divides. What differs is the per-gift figures on the anniversary table. allocateEarliestFirst already apportions same-day transfers pro rata for the annual exemption, so the module holds one notion of “earlier” and two of “same day”.
• Pension exclusions are not modelled. Death-in-service benefits payable from a registered pension scheme, and dependants’ scheme pensions, are out of scope in law; this app charges such a row like any other pension. Overstates tax where your file records that cover as a pension. See #6 for what a pension row is, and #8 for whose estate it is charged in.
• A debt secured on relievable property still reduces only the residence band, not the relief. A debt now records the asset it is charged on, and IHTA 1984 s.162(4) applies that to business and agricultural relief exactly as it applies to the residence band — but only the residence band reads the link so far: securedByAsset is consulted for the home cap and by nothing on the relief side. A mortgage taken against a relievable asset is deducted from the general estate instead. Understates tax. The fact the fix needs is now in the file, which is why the link was built as a full link rather than a “secured on the home?” flag.
• No minimum ownership period is tested for business or agricultural relief. The law requires two years’ ownership for business property (IHTA 1984 s.106) and two or seven years’ ownership or occupation for agricultural property (s.117). The test is not modelled at all — nothing in this app records when you acquired a holding, so a newly acquired asset you tag as relievable is relieved immediately. Understates tax.
• The £2.5m relief allowance is not reduced by business or farm property you gave away in the seven years before death. HMRC (IHTM25510) says the allowance on a death is the full amount “less any amounts already used by chargeable transfers made by the individual in the seven years before”. This tool gives the estate the whole allowance, so relieved property held at death is relieved at 100% up to the full cap when part of it should be at 50%; applyRelief takes the cap and nothing else. Errs toward the taxpayer (understates tax). It needs a business or farm asset that has been given away. (#194)
• Each of you starts with a whole, unused lump sum allowance. Your file records no tax-free cash already taken, so the tool assumes none has been (lumpSumAllowancesFor), in the year-by-year cashflow that the Retirement verdict reads. If either of you has taken some, too much of each withdrawal is treated as tax-free and too little income tax is charged, so the money lasts longer on paper than it will: errs toward the taxpayer on the verdict. The same under-charge draws the pot down more slowly and leaves a larger estate, so on the inheritance tax projection it errs away from the taxpayer. The required-pot figure takes the opposite assumption, that tax-free cash is gone, and is cautious. (#195)
• Three assumptions about when a pension can be drawn. (1) The 2028 step is not applied to a pot already open. The normal minimum pension age is 57 on and after 6 April 2028 (FA 2004 s.279(1) as substituted by FA 2022 s.10), and HMRC’s Pensions Tax Manual (PTM062100) says no pension may be paid before it except on ill-health or a protected pension age. Someone who reaches 55 before that date and has not drawn is shown with an open pot from 55 onwards, including after the step (pensionAccessDate returns the first day they may draw, and the engine treats the pot as open from then on). HMRC consulted until 28 September 2026 on draft regulations that would protect some people whose entitlement arose before the step, noting that “without further provision, payments made after 5 April 2028 could potentially fail to satisfy conditions linked to the NMPA”; until they are made, that protection is not law. (2) A protected pension age is assumed that nobody claimed. It is a fact about your scheme and is not modelled, yet for that same person the tool behaves as if they had one. Both err toward the taxpayer: the pot is reachable earlier than the law may allow and the bridge is not tested. (3) The one-off pension top-up has no owner, so it is split in the same shares as the pensions you already hold and borrows whichever person’s allowance and unlock date that implies: errs either way, by household. The unlock year itself is granted whole, as stated above. (#169, #221)
• Every pension is treated as outside the estate until 6 April 2027 (#231). The app assumes the scheme trustees decide who receives a pension, which is the usual case for a personal pension or SIPP (HMRC IHTM17051). Where the member’s nomination binds the trustees, or the death benefit is payable to the estate as of right, the fund is part of the estate (IHTA 1984 s.5; HMRC IHTM17052 and IHTM17041). The file has no field that says which a pension is, so the app cannot tell. On the Current rules view that errs toward the taxpayer: the tax is understated by 40% of the fund, and by more where the larger estate would also have lost residence band to the taper. From 6 April 2027 every unused pension is counted whatever its terms, and the app opens on the new rules from that date, so the gap closes then (#236).
• A couple is planned on your life alone. The plan-until age comes from your own age and sex in the ONS tables (planUntilAge); your spouse’s are not used, and it is not the age to which one of you is still alive. The money is therefore asked to last for a shorter time than a couple needs, so the verdict flatters: errs toward the taxpayer. The effect on the bill at that age can go either way. A joint-survival plan is tracked as #148, and a shorter horizon is not the safe side to be wrong on. (#148)
• Company cash is spent at face value. A pound drawn from company cash is treated as a pound you can spend (not modelled: the tax on getting it out), though getting money out of a company is taxed (as salary, as a dividend, or on winding up, each differently) and your file does not say which you intend. It is drawn last, after cash and pensions, so it matters only to a plan that has already used up the rest. Errs toward the taxpayer on whether the money lasts. (#151)
• One Budget line the app cannot count swaps your retirement spending for the figure typed into your file. Spending comes from the Budget only while every line can be counted (retirementSpendSource); otherwise the hand-set figure stands, and the Budget tab says so but the Retirement tab does not. That figure was typed under no recorded basis and may not be the take-home figure the engine now assumes, so it errs either way. It fires on a single mistyped Budget amount. (#186)
• A staggered retirement flatters the plan when the lost pay is not replaced. Where one of you has stopped and the other still works, the Retirement tab adds the working person’s stated saving to the pot and draws nothing until the second person stops (ADR 0017). That saving was measured while both of you were earning, so the figure is right only if the take-home pay the person who stopped has given up is covered by their pension and rent. Where it is not, the pot is shown larger than it would be: this errs toward the taxpayer. It is an estimate, and the Retirement tab says so on the “Nothing is drawn” stage. The app does not yet work this out from pay; asking for pay before tax (#142) is how it will be closed.
• An unreadable retirement figure is counted as nothing (noughtIfUnreadable), which is cautious for one question and flattering for another. For does the money last it makes the plan harder to afford, so it errs away from the taxpayer. For what is the bill the same nought shrinks the estate — property growth held flat, no saving, no top-up, no State Pension — so it errs toward the taxpayer. The banner names the cell; it does not say the bill moved. (#196)
• Relief classification is driven by matching text in the IHT-status column. A status is only treated as relievable at all if it contains “business” or “agricultural” — but once it does, the digits “50” anywhere in the cell demote it to 50%-class. A status reading “Business relief — £50,000 stake” is silently halved.
• “Pension” is matched against the wrapper column ignoring capitals and surrounding spaces, so lowercase pension counts as a pension and nothing else is guessed (normaliseWrapper). A row reading Pension - SIPP or SIPP is left out of every tax figure, and a warning names it and says the bill may be too low.
• The projection’s own tax figure reaches no screen. The panel that carried it came off the Overview on 23/09/2026. ihtAtAge still computes it, and it is still asserted equal to the Inheritance tab’s bill, so nothing disagrees — but there is now no screen on which you can watch a future year’s bill move, so do not go looking for one.

10. Every statutory reference this tool relies on

An index, not a second explanation — the sections above are where each rule is worked through, and this is where you look one up. It exists because the same sections were being re-researched from HMRC’s manuals over and over, and the answers were not written down anywhere a reader could find them.

It cannot fall behind the code. A test asserts that every IHTA 1984 s.X and IHTM##### appearing anywhere in the app’s source is listed here. Cite something new in code and the build fails until this table explains it. That is the only property that makes a page like this worth trusting — the widowed paragraph in section 4 was false for a day in September 2026 precisely because nothing checked it.

11. Constants & statutory defaults

Every figure above is held by the app, not by your file. Tax law is public and identical for everyone, so the statutory ones live in a single dated rule set inside TheirInheritance, and each saved file records which rule set its figures were computed under. Editing a tax constant in your JSON — a nil-rate band, the taper, the IHT rate, the BPR/APR allowance, the pension commencement date — changes nothing on screen; older files that state those keys keep them untouched on save, but they are not read. If a future Budget moves one of these, a new version of the app moves it.

12. Reduce your bill — one date, one method

Every figure on the card is worked out at one date: your modelled death at the life expectancy in your file — the same row of the same year-by-year projection the Retirement tab draws (#2), charged as the death on which the bill falls: the second death for a couple, with both sets of allowances. The projection counts years by your own age, so “age 90” means the year you turn 90. The card reads the life expectancy your file states, not wherever the Retirement tab’s “Plan to age” slider has been dragged: those sliders move Retirement and nothing else. For reference only, the card also quotes the bill if you died today — the figure Inheritance Tax shows.

Every line is the engine run twice. A lever’s saving is the bill at that date with that one change, against the bill with none. “All three together” is a further run with all three at once. No saving is estimated with a formula, and the total is not the lines added up: the reduced charity rate changes what every other pound saves, and near the residence-band taper a pound out of the estate saves more than a pound elsewhere.

• Gift now. The gift leaves your savings today, with all the growth it would have earned, and is logged as a gift dated today. Where that date is seven years or more before the modelled death it has left the estate (IHTA 1984 s.3A); where it is not, the engine charges it as the failed gift it would be. It can come only out of savings and investments — not the home, pensions, or holdings tagged for business relief.
• Leave to charity in your Will. Written the way HMRC’s model Will clause writes it: a legacy equal to a chosen percentage of the baseline amount (IHTM45008). The baseline is the estate after reliefs, less the nil-rate band that lifetime gifts have not already used, with the legacy added back — the residence band is not deducted (Sch. 1A para 5; IHTM45009, IHTM45010, IHTM45011). At 10% or more of it the death estate is charged at 36%, not 40% (para 2). The legacy itself is exempt (s.23), but where the estate holds relieved business or farm property only the s.39A fraction of it comes off the charge, while the 10% test still counts it in full (para 6(2); IHTM45031). The 36% applies to the death estate only; a failed lifetime gift keeps its own rate. The whole estate is treated as one component — the general component. At a couple’s second death that is exact on the law as it stands, because the survivor owns everything outright. Budget 2026 announced that, from 6 April 2027, those administering an estate will be able to choose whether pension property counted in it goes into the general component or is treated as a separate component; that is not yet law (OOTLAR 1.27). Once enacted, one general component will no longer be exact on the new rules for an estate with pensions in it: it will be only one of the two choices, and the app does not model the other. For a single or divorced person holding something jointly with someone else, a share that passes by survivorship is really a separate component the Will cannot reach, and treating it as general understates the bill. Your file has a Survivorship column, but the app does not read it and no values for it are defined yet, so the tool cannot separate it. The legacy is paid out of the free estate only: on the new rules from 6 April 2027 pension funds count in the baseline but pass under the scheme, not the Will, so a legacy larger than the free estate is cut down to it and the 10% test is taken on what is actually paid.
• Regular gifts out of income. A monthly amount in today’s money, rising with inflation like every other yearly amount (#2), paid every year from now to the modelled death. Each year’s payments leave the estate as they are made, so the estate at death is smaller by the payments and by what they would have grown to. The saving is shown “if accepted”: s.21 is not unconditional (#7), and HMRC decides after death. The one condition a projection can speak to is whether there was income to make them from, so each year is checked: the spare income in a working year is the saving you state; in a retired year it is rent, State Pensions and scheme pensions above what you spend. Investment returns are not split into income and capital here, so they are not counted as spare income, which errs towards a higher bill — but retired income is taken before income tax, while HMRC measures it after tax (IHTM14250), which errs the other way; see the known gaps. The part of a year’s gifts above its spare income cannot be out of income; it is flagged on screen and charged as an ordinary gift dated that year, on the seven-year clock — so those made seven years or more before the modelled death have left the estate, and the rest are charged. A gift is only ever paid from money that exists: savings above any business or farm holdings in them, then pensions, never company cash. Where nothing is left, that year’s gift is left out entirely and the card says so. The income test uses the household’s income, and the gifts are treated as made by the person the projection follows; s.21 tests each giver’s own income.
• On a married file, a modelled gift is set against one nil-rate band. That is right if the giver dies first. If the giver is the survivor, their own failed gifts are measured against the band as it stands at their death, which includes the one transferred from their spouse, and the saving shown for a large gift made less than seven years before the modelled death is too high. The file does not say who dies first, and the tool does not guess.

13. Which rules the figures are on, and what that changes

Every point-in-time screen answers a question with a date in it — and until 21 September 2026 the app never said which date. The Overview, Inheritance Tax, Reduce your bill and Gifts now share one switch with two positions, and each screen says which one it is showing.

What the switch changes, exactly. It selects which rule applies to unused pension funds, and nothing else. The death is modelled as happening today on the Overview, Inheritance Tax headline, Gifts and Beneficiaries (Reduce your bill, the cover runway and Retirement model a death at the life expectancy in your file, with the same pension rule): the seven-year gift clock, the test of whether a life policy is still in force, and every asset value are all struck at today’s date in both views. So the second position means “your estate as it stands now, charged under the rules that apply from 6 April 2027” — not a death on that date. Saying otherwise would be describing a calculation this app does not perform.

Which view opens first: current rules. Settled on 9 October 2026, reversing the 23 September 2026 choice to open on the new rules. That holds until 6 April 2027; from that date the app opens on the new rules, because they are then the law in force (#236). On the death-today screens your assets are as they stand, gifts on today’s seven-year clock, cover in force today; Reduce your bill models a death at life expectancy. Either way only the pension rule differs between the two views. Every figure on every screen, including every projected year, takes the pension rule of the view chosen, so the two views differ in that one rule and nothing else; a test holds that in both directions. Both views remain reachable from the toggle, and the choice is held for the session only, not saved in your file.

• “Current rules”. Unused pension funds sit outside the estate in every figure, including every projected year. It is a snapshot of the liability, not a prediction of when the death falls.
• “New rules from 6 April 2027”. The pension rule is the one from the date the rule set gives as pensionsIhtFrom, applied to every figure and every projected year. Unused pension funds are inside the chargeable estate, so the estate the taper is tested on is larger — which is what a plan will actually meet.
• The date is a figure in the rule set, never a date written in the code. A Budget that moves it is a new rule set under a new id (ADR 0003). Once it has passed, the app opens on the new rules and the switch stops being offered.

The residence band taper is what makes the two views differ by more than the pensions. The band is withdrawn by £1 for every £2 of estate above £2,000,000, tested before reliefs (IHTA 1984 s.8D(5), set out in section 4). Bringing pensions into the estate can push it over that line, so the band falls at the same moment the estate rises and the bill moves by more than the pension itself.

Life cover, and the date it stops

Cover is counted in full at the date the screen is modelling, and the Overview says so beside the figure. The rule this app is working towards is that cover counts only where the policy is still in force at the date the plan uses — the second death, from the Retirement tab’s plan-until age. That shared function is not built yet, so rather than invent a second one, the Overview names the date the last policy ends and states plainly that if it has ended by then the whole bill is still to find. Recorded in NOT-COVERED.md.

What a pension is worth to the person who inherits it

From the switch-over date, inheritance tax is charged on unused pension funds first; the beneficiary may then be charged income tax on what they take. Where the member was 75 or over at death — a death on the 75th birthday is inside the charge, not outside it — the benefit is taxable as the recipient’s pension income (ITEPA 2003 s.579A; for an uncrystallised funds lump sum, ITEPA 2003 s.637J(5), which applies s.579A to it). Where the lump sum goes to a recipient who is not a “qualifying person”, such as a company, s.637J(6) charges the scheme administrator under FA 2004 s.206 instead.

A death under 75 is not unconditionally tax-free, and this page used to say it was. It is free of income tax only where both conditions hold:

• the lump sum from an uncrystallised pot is paid within two years of the day the scheme administrator first knew of the death, or could first reasonably have been expected to know of it (ITEPA 2003 s.637J(2); the period is defined in s.637J(7)). Budget 2026 announced the removal of this two-year condition for payments made on or after 28 October 2026; that is not yet law, so this page and the app still state it (OOTLAR 1.18); and
• it is within the member’s lump sum and death benefit allowance of £1,073,100 (ITEPA 2003 s.637R, inserted by FA 2024 Sch. 9; s.637S works out how much of it is still available). That figure is held in the app’s rule set, not typed here.

Miss the two-year condition on an uncrystallised lump sum and the whole lump sum is taxed as the recipient’s pension income (ITEPA 2003 s.637J(3)); exceed the allowance and the excess is (s.637J(2)). Either way it is at their marginal rate. Budget 2026 announced two changes to this. They are not yet law (OOTLAR 1.18 and 1.17). The two-year condition is to go for payments made on or after 28 October 2026, so a late payment would no longer be taxed for that reason alone. And the excess over the allowance would no longer be treated as the recipient’s pension income: each beneficiary would instead be charged on their own share of it, by reference to their marginal rate for the year it is paid, backdated to payments made on or after 6 April 2024. The rate is still the beneficiary’s marginal rate. The app does not model any of this second charge, and no screen states it: an assumed beneficiary rate would appear on the page as a computed figure when it is a guess about someone else’s tax position. Listed among the gaps below.

Paying the bill — where the money is taken from

The Overview names the sources in the order an executor reaches for them: cover written in trust, then cash and savings, then investments. It names the home only when those three together do not reach the bill. Two ordinary facts sit behind that order, and neither is a tax rule this app computes with:

• a bank or building society will pay inheritance tax direct to HMRC out of the deceased’s account before probate is granted, under the Direct Payment Scheme (IHTM05120), so cash does not have to wait for probate; and
• tax attributable to land may be paid in ten yearly instalments (IHTA 1984 s.227), so even a shortfall against the property is not necessarily a forced sale.

The ordering is practice, not law: it decides only the words on the card, never a figure.

Not modelled, and said here rather than discovered

• Gifts into trust. Chargeable lifetime transfers, the lifetime charge and the fourteen-year look-back are not modelled at all. The Gifts tab says so on its face.
• Gifts with reservation of benefit. Give something away and go on using or benefiting from it and, for tax, you have not given it away: the value stays in your estate and no seven-year clock runs. This app does not ask the question, holds no field for the answer, and cannot work it out from anything your file records — such a gift is treated here as an ordinary one. So a file whose owner has made such a gift shows a bill that is too low, with nothing on any screen saying so, and this is the only gap on this page that runs that way without a warning beside the figure. The exceptions, the pre-owned assets charge and a market rent paid to escape the reservation are not modelled either. Storing the answer needs a new version of the file format, which is why it is written here rather than built.
• Scottish rates of income tax. Where income tax appears anywhere in this app the rest-of-UK rates are used. The app holds no residence field for the person, and this page will not invent one.
• The beneficiary’s income tax on an inherited pension, as set out above.

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