Inheritance Tax Thresholds for Married Couples: How Much Can You Pass On Tax-Free?

The UK inheritance tax system provides two main allowances relevant to many married homeowners.

The first is the standard nil-rate band.

The second is the residence nil-rate band, which applies in certain circumstances involving a qualifying home.

Both allowances can potentially be increased by unused allowances transferred from a deceased spouse or civil partner.

Inheritance Tax Allowances for 2026/27

The standard inheritance tax rate is generally 40% on the taxable amount above available allowances.

These figures represent potential allowances, not guaranteed exemptions.

For example, the residence nil-rate band may be unavailable where there is no qualifying residential interest passing to eligible direct descendants.

It can also be reduced for larger estates.

One of the most important inheritance tax provisions for married couples and civil partners is the spouse exemption.

Transfers between qualifying spouses or civil partners are generally exempt from inheritance tax.

For example, if a husband dies leaving his entire estate to his wife, the transfer will ordinarily qualify for the spouse exemption.

This can mean no inheritance tax is payable on the first death.

However, special restrictions may apply where the spouses have different inheritance tax residence statuses.

Does the Spouse Exemption Mean No Inheritance Tax Will Ever Be Paid?

No.

The spouse exemption generally postpones the point at which inheritance tax may become relevant rather than permanently removing the assets from the inheritance tax system.

Assets inherited by the surviving spouse normally become part of their own estate.

When the survivor dies, their estate is assessed using the rules and allowances applicable at that time.

For example, if a wife inherits £600,000 from her husband and later dies with a total estate of £1.2 million, the estate may face inheritance tax even though none was payable when her husband died.

The actual liability depends on available allowances, exemptions, reliefs and other relevant circumstances.

The transferable nil-rate band allows the unused percentage of a deceased spouse's or civil partner's standard inheritance tax allowance to increase the allowance available to the survivor's estate.

The standard nil-rate band is £325,000 in 2026/27.

If the first spouse dies without using any of their nil-rate band, the survivor's estate may claim a 100% increase.

This can create a combined standard nil-rate band of £650,000.

Example: First Spouse Leaves Everything to the Survivor

Consider a married couple, David and Helen.

David dies leaving his entire £450,000 estate to Helen.

Assume the spouse exemption applies in full and David has made no chargeable lifetime gifts affecting his nil-rate band.

Because his estate passes entirely under the spouse exemption, none of his standard nil-rate band is used.

When Helen eventually dies, her estate may be able to claim the unused 100% of David's nil-rate band.

At current thresholds:

The transfer is not automatic in every estate administration situation.

The appropriate claim and supporting evidence may be required.

The transferable amount is calculated as a percentage of the allowance unused on the first death.

This matters where the first spouse leaves assets to children, friends or other non-exempt beneficiaries.

Example: A Gift to Children on the First Death

Suppose David leaves £130,000 to his children and the remainder of his estate to Helen.

Assume there are no earlier chargeable gifts or other relevant adjustments.

The £130,000 gift uses 40% of David's £325,000 nil-rate band.

That leaves 60% unused.

When Helen dies, her estate may claim a 60% increase to her own nil-rate band.

This is why the exact distribution on the first death matters.

It is also why older wills should be reviewed rather than assuming the full allowance will always transfer.

The transferable nil-rate band rules apply to a surviving spouse's or civil partner's estate where the relevant conditions are met, even if the first spouse died before the transfer rules were introduced in October 2007.

The historical date and circumstances of the first death must be considered when calculating the unused percentage.

The allowance is not simply the monetary amount that was unused at the time.

Instead, the unused percentage is applied to the nil-rate band available when the surviving spouse dies.

This means records from an earlier estate can remain important many years later.

The residence nil-rate band is an additional inheritance tax allowance available where a qualifying residential interest passes to eligible direct descendants.

For 2026/27, the maximum individual residence nil-rate band is £175,000.

A surviving spouse's estate may also be able to claim unused residence nil-rate band from the first spouse or civil partner.

This can potentially provide a combined residence nil-rate band of £350,000.

When added to combined standard nil-rate bands of £650,000, the maximum allowances may reach £1 million.

Who Counts as a Direct Descendant?

For these purposes, direct descendants can include children and grandchildren.

Certain adopted, foster and stepchildren also qualify under the relevant statutory rules.

However, leaving a home to a sibling, niece, nephew or unrelated friend will not ordinarily satisfy the direct descendant requirement.

Some trust arrangements qualify, but others do not.

The legal entitlement created by the will or trust must therefore be considered carefully.

No.

The £1 million figure represents the potential combined inheritance tax allowances, not a requirement to own a house worth £1 million.

For example, a surviving spouse might leave:

• A qualifying home worth £450,000.
• Savings worth £250,000.
• Investments worth £200,000.

The total estate would be £900,000.

If the full combined standard and residence nil-rate bands were available, the estate could potentially pass without inheritance tax.

However, the residence nil-rate band is limited by the value of the qualifying residential interest that passes to eligible descendants.

A small qualifying property may therefore restrict the amount of residence nil-rate band that can be used.

Consider a couple who are married and own a family home.

The first spouse dies leaving everything to the survivor.

Assume the full spouse exemption applies, no allowances have been used and there are no complicating lifetime gifts.

The surviving spouse later dies with the following estate:

The will leaves the estate to their adult children.

Assume the full transferable nil-rate band and residence nil-rate band are available.

This is the situation commonly described as the £1 million inheritance tax allowance for married couples.

However, it relies on the conditions being satisfied.

It is not a general exemption that applies to every £1 million estate.

Now consider the same circumstances, but assume the surviving spouse's estate is worth £1.3 million.

The estate includes a qualifying home worth £650,000 and passes to the couple's children.

Assume the full £1 million combined allowances are available.

This simplified example demonstrates that the combined allowances can reduce the taxable estate substantially without necessarily eliminating the liability.

Other exemptions, reliefs, gifts and liabilities could change the outcome.

The residence nil-rate band is subject to a taper where the relevant estate exceeds £2 million.

The allowance is reduced by £1 for every £2 above the threshold.

For a surviving spouse who could otherwise claim £350,000 of combined residence nil-rate band, tapering can substantially reduce the available allowance.

Example: A £2.2 Million Estate

Assume the surviving spouse's estate is worth £2.2 million and the full combined residence nil-rate band would otherwise be available.

The estate exceeds the £2 million threshold by £200,000.

The taper reduction is therefore £100,000.

This assumes no taper reduction affected the amount transferred from the first spouse.

If the first spouse's estate was itself above the taper threshold, the transferable percentage may also have been reduced.

The taper calculation is based on the relevant net estate before deducting certain exemptions and reliefs.

Couples with substantial property or business wealth should therefore obtain a detailed calculation.

Potentially.

The residence nil-rate band includes downsizing provisions designed to address certain situations where someone sold or downsized from a qualifying home.

For example, a couple may sell a large family home and move into a smaller property during retirement.

The estate may still qualify for an additional amount under the downsizing rules if the statutory conditions are met.

However, the calculation is not automatic.

It depends on the timing of the disposal, the value of the former property, the estate and the assets passing to direct descendants.

Downsizing relief should be assessed using the relevant HMRC rules rather than assuming the full allowance remains available.

Not necessarily.

Remarriage can make the inheritance tax position more complicated, particularly where one or both spouses have been previously widowed.

A surviving spouse's estate may be able to benefit from unused allowances associated with a previous deceased spouse or civil partner.

However, the total transferable increase to the standard nil-rate band is generally capped at 100% of the survivor's own nil-rate band.

It is not possible simply to accumulate an unlimited number of full allowances through successive marriages.

The residence nil-rate band also has transfer rules and restrictions.

For blended families, inheritance tax planning must be coordinated with the intended distribution between a surviving spouse and children from earlier relationships.

Related Telmar article: Estate Planning for Blended Families: Protecting Your Spouse and Children.

Yes.

Trusts can affect whether the spouse exemption applies, how much of the first spouse's nil-rate band is used and whether the residence nil-rate band is available.

For example, an appropriately drafted immediate post-death interest trust for a surviving spouse may qualify for spouse exemption treatment.

However, an ordinary discretionary trust does not necessarily receive the same treatment.

Some couples use trusts to balance financial security for the survivor with eventual inheritance arrangements for children.

That can be particularly relevant in second marriages.

But trusts can also introduce administration costs, tax reporting obligations and restrictions on how assets are used.

The correct structure depends on family objectives as well as tax consequences.

A trust should not be assumed to preserve every allowance automatically.

Unmarried couples do not generally benefit from the same inheritance tax spouse exemption and transferable nil-rate band rules as married couples or civil partners.

This can produce materially different tax outcomes.

For example, leaving a substantial estate to an unmarried partner may result in inheritance tax even where the same transfer to a qualifying spouse would have been exempt.

Unmarried couples may also face different intestacy and property ownership issues.

Marriage or civil partnership should not be considered solely as a tax-planning decision.

However, the legal distinction is important when assessing inheritance arrangements.

Related Telmar article: Estate Planning for Unmarried Couples: How to Protect Your Partner in the UK.

Transferable allowances generally need to be established during administration of the surviving spouse's estate.

Personal representatives may need to provide information about the first spouse's estate, including the will, probate documents, gifts and distributions.

HMRC form IHT402 is used to claim a transfer of unused standard nil-rate band where the relevant inheritance tax account is required.

The residence nil-rate band and any transferable amount are addressed through the applicable HMRC forms and procedures, including IHT435 and IHT436 where relevant.

Claims are subject to statutory time limits, with extensions potentially available in some circumstances.

It is sensible to retain relevant records following the first death even where no inheritance tax was payable.

Documents may be needed many years later.

Several assumptions can lead to inaccurate expectations.

“Everything passes tax-free because we are married.” The spouse exemption may apply on the first death, but inheritance tax can arise when the survivor dies.

“Every married couple has a £1 million allowance.” The maximum depends on transferable allowances, a qualifying home, eligible descendants and other conditions.

“We must own a £1 million property.” The potential allowances apply to the wider estate, although the residence nil-rate band depends on a qualifying residential interest.

“The unused allowance transfers automatically without records.” Personal representatives may need to make claims and provide supporting evidence.

“Trusts always reduce inheritance tax.” Trust taxation depends on the structure and beneficiaries.

“Remarriage gives us additional unlimited allowances.” Transferable allowances are subject to statutory limits.

Understanding these distinctions can help couples avoid planning based on an oversimplified headline figure.

A review may be particularly useful when:

• Preparing or updating wills.
• Buying or selling a family home.
• Receiving an inheritance.
• Retiring or changing pension arrangements.
• Entering a second marriage.
• Making substantial lifetime gifts.
• Selling a business.
• Experiencing the death of a spouse or civil partner.
• Seeing the estate approach or exceed £2 million.
• Responding to significant legislative changes.

The nil-rate band and residence nil-rate band are currently frozen through 2030/31.

This means increases in property values and other assets can affect the proportion of an estate exposed to inheritance tax even where the allowances remain unchanged.

A review does not necessarily mean transferring assets or establishing trusts.

It may simply involve checking the calculations, updating wills and ensuring that appropriate records are available.

Inheritance tax planning for married couples involves more than identifying the maximum available allowances.

The first and second deaths, property ownership, beneficiaries and existing documents all need to be considered.

At Telmar Estate Planning, a useful starting point is understanding the couple's assets, family circumstances and inheritance objectives.

A review may identify the need to update wills, check transferable allowances or consider the interaction between trusts and the family home.

Where specialist legal, tax or regulated financial advice is required, appropriate professional input should form part of the process.

The objective should be to make informed decisions while maintaining financial security and flexibility.

Married couples and civil partners can potentially benefit from substantial inheritance tax allowances.

The standard nil-rate band and residence nil-rate band can provide up to £500,000 per person, with unused allowances potentially transferable to the surviving spouse or civil partner.

Together, these can reach £1 million.

However, the full amount depends on statutory conditions, the value of the estate, the intended beneficiaries and how the allowances were used on the first death.

Understanding these rules can help couples make realistic plans for their family rather than relying on a headline figure that may not apply to their circumstances.

1. HMRC — Transferring Unused Basic Threshold for Inheritance Tax
   https://www.gov.uk/guidance/transferring-unused-basic-threshold-for-inheritance-tax
   Official guidance on transferring the unused percentage of the standard nil-rate band, with calculation examples.

2. HMRC — Transferring Unused Residence Nil-Rate Band
   https://www.gov.uk/guidance/inheritance-tax-transfer-of-threshold
   Official guidance on the transferable residence nil-rate band and its eligibility conditions.

3. HMRC — Residence Nil-Rate Band Guidance
   https://www.gov.uk/guidance/inheritance-tax-residence-nil-rate-band
   Official guidance on qualifying homes, direct descendants, tapering and estate calculations.