When the first spouse or civil partner dies, anything left to the survivor is exempt from Inheritance Tax, and the survivor inherits the unused percentage of the first partner’s allowances. With both nil-rate bands and both residence bands, a couple can shelter up to £1,000,000 when a home passes to children.
The £1,000,000 couple allowance
| Allowance | Per person | Couple |
|---|---|---|
| Nil-rate band | £325,000 | £650,000 |
| Residence nil-rate band | £175,000 | £350,000 |
| Combined (home to children) | £500,000 | £1,000,000 |
Worked example — £1,200,000 estate, home to children
| Scenario | Tax-free bands | IHT due |
|---|---|---|
| One person’s bands only | £500,000 | £280,000 |
| Both bands transferred | £1,000,000 | £80,000 |
| Saving from the transfer | £200,000 |
| Step | Amount |
|---|---|
| Net estate | £1,200,000 |
| Less nil-rate band | −£650,000 |
| Less residence nil-rate band | −£350,000 |
| Taxable estate | £200,000 |
| Rate | 40.0% |
| Inheritance Tax due | £80,000 |
How the transfer works
The transfer is by percentage, not a fixed sum. If the first spouse used none of their nil-rate band (because everything passed to the survivor), 100% transfers — doubling the band. Executors claim it on the second death using forms IHT402 (nil-rate band) and IHT436 (residence band).
The current UK Inheritance Tax rules
| Allowance / rate | Amount | Notes |
|---|---|---|
| Nil-rate band (NRB) | £325,000 | 0% on this slice of every estate |
| Residence nil-rate band (RNRB) | £175,000 | Only when a home passes to direct descendants |
| Taper threshold | £2,000,000 | RNRB falls £1 for every £2 of estate above this |
| Standard rate | 40.0% | On the estate above the available bands |
| Reduced charity rate | 36.0% | If ≥10% of the net estate goes to charity |
Sources & as-of
- Nil-rate band, residence nil-rate band, 40% / 36% rates, £2m taper: GOV.UK — Inheritance Tax.
- Bands frozen at these levels until 5 April 2030 (end of tax year 2029-30): GOV.UK — IHT nil-rate bands from 6 April 2028.
- Residence nil-rate band conditions & taper: GOV.UK — Residence nil-rate band.
- Gifts & 7-year taper relief: GOV.UK — Inheritance Tax: gifts.
- Data as-of 2026-06-18. This is a planning estimate, not tax advice — confirm your figures with HMRC or a qualified solicitor / financial adviser. Inheritance Tax applies UK-wide (there are no devolved IHT rates).