Inheritance Tax threshold for married couples: the £1m allowance
The short answer: a married couple or civil partners can pass on up to £1,000,000 free of Inheritance Tax. Each has a £325,000 nil-rate band plus a £175,000 residence nil-rate band for a home left to children or grandchildren, and unused allowances pass to the survivor. Without a home going to descendants, the couple limit is £650,000. Unmarried couples get no transfer.
How the £1 million is made up
| Each person | Couple | |
|---|---|---|
| Nil-rate band | £325,000 | £650,000 |
| Residence nil-rate band | £175,000 | £350,000 |
| Total | £500,000 | £1,000,000 |
Typically the first partner to die leaves everything to the other, which is tax-free and uses none of their allowances. On the second death, the estate gets both sets, as long as the executors claim them. Both bands are frozen until April 2031.
Tax on the second death
Assuming everything went to the surviving spouse first, and the estate includes a home left to children:
| Estate | Married, home to children | Married, no descendants | Unmarried, one estate |
|---|---|---|---|
| £500,000 | £0 | £0 | £0 |
| £750,000 | £0 | £40,000 | £100,000 |
| £1,000,000 | £0 | £140,000 | £200,000 |
| £1,500,000 | £200,000 | £340,000 | £400,000 |
| £2,200,000 | £520,000 | £620,000 | £720,000 |
The last column is a single person's estate passing to children, such as an unmarried partner who died owning everything. At £2,200,000, the taper has reduced the couple's residence band.
Conditions for the residence nil-rate band
- A home you lived in at some point must be left to direct descendants: children, stepchildren, adopted or foster children, and their children.
- Leaving it to nieces, nephews, siblings or friends does not qualify.
- If you downsized or sold your home after July 2015, a downsizing addition may still apply.
- It tapers away by £1 for every £2 the estate is over £2,000,000.
Second marriages and partial use
If the first partner left some of their estate to children directly, part of their nil-rate band was used, and only the unused percentage transfers. If someone was widowed twice, the maximum transfer is still one extra band. Remarriage does not lose a transferred allowance.
A worked example: the second death
Sam and Alex are married with two children. Their home is worth £600,000, and they have £250,000 in savings and investments. Sam dies first and leaves everything to Alex: no tax, and none of Sam's allowances are used.
When Alex dies, the estate is £850,000, and the home goes to the children:
| Alex's estate | £850,000 |
| Alex's nil-rate band plus Sam's, transferred | −£650,000 |
| Both residence nil-rate bands | −£350,000 |
| Inheritance Tax | £0 |
If the executors forgot to claim Sam's unused bands, the tax would be £140,000. If the home went to a nephew instead of the children, both residence bands would be lost and the bill would be £80,000.
What executors need to do
- Value everything in the estate at the date of death, including the home, savings, investments, and from April 2027 most unused pensions.
- Find out what the first spouse left and to whom, using their will or the earlier probate records.
- Claim the transferred nil-rate band on form IHT402 and the transferred residence band on IHT436, with the full IHT400 return if one is needed.
- Make the claim within two years of the second death. HMRC can accept late claims in some cases, but don't rely on it.
Many estates under the thresholds don't need a full return, but transferring allowances usually does. A solicitor or probate specialist can handle it.
Common mistakes
- No will: the intestacy rules may split the estate in ways that waste the residence band, and give unmarried partners nothing.
- Leaving the home into some kinds of trust: only certain trusts for direct descendants qualify for the residence band.
- Assuming the estate is under £1,000,000: house price growth, life insurance not written in trust and, from 2027, pensions can push it over.
- Lifetime gifts: gifts in the last seven years use up the nil-rate band first.
Unmarried couples
Cohabiting partners pay Inheritance Tax on anything above the survivor's allowances left to each other, and can't transfer unused bands. Marriage or civil partnership, a will, life insurance in trust and gifts during life are the main ways to plan. Many couples don't realise there is no automatic right to inherit without a will.
Changes coming
- Pensions count towards estates from April 2027. See pensions and Inheritance Tax.
- Business and agricultural relief is capped at 100% on the first £1,000,000 from April 2026, then 50%.
For gifts during your lifetime, see the 7-year rule.
Rates for 2026/27, England, Scotland, Wales and Northern Ireland. This is general information, not tax advice.
Common questions
What is the Inheritance Tax threshold for a married couple?
Up to £1,000,000. Each person has a £325,000 nil-rate band and a £175,000 residence nil-rate band, and anything unused on the first death passes to the surviving spouse or civil partner.
Does the residence nil-rate band apply if we have no children?
No. It only applies when a home, or the value of one, goes to direct descendants: children, stepchildren, adopted or foster children and grandchildren. Without them, the couple threshold is £650,000.
Do unmarried couples get the same allowance?
No. Unmarried partners cannot inherit from each other tax-free or transfer unused allowances. Each has up to £500,000, and anything left to a partner above that is taxed at 40%.
What happens to the threshold above £2 million?
The residence nil-rate band falls by £1 for every £2 the estate is over £2 million, so it disappears entirely for an individual estate above £2.35 million.
How do you transfer the unused allowance?
The executors of the second estate claim it, using form IHT402 for the nil-rate band and IHT436 for the residence nil-rate band, within two years of the second death.