Inheritance tax for married couples and civil partners

Inheritance tax is a tax on the estate, meaning the property, money and possessions, of someone who has died¹. The nil-rate band is £325,000¹. Anything above the thresholds is normally charged at 40%².

For a married couple or civil partners, the arithmetic works differently from a single person's. Anything left to a surviving husband, wife or civil partner is exempt from inheritance tax, and unused allowances pass across³. Add the family home allowance and a couple can potentially pass on up to £1m entirely tax-free⁴.

That £1m figure is the one most couples want. It is not automatic, and it depends on what you leave, who you leave it to, and whether the first of you to die used any of the allowance. Unmarried couples get none of it.

Up to £1 million between you: how the allowances add up

The £1m figure comes from stacking three allowances. Each person has a £325,000 nil-rate band¹. Each person also has a £175,000 residence nil-rate band, for passing on a home to a direct descendant⁵. Where the first partner to die leaves everything to the survivor, their unused allowances pass across, so the survivor can leave up to £1m free of inheritance tax⁴.

The residence allowance was introduced in April 2017, and it is what lifted couples from the older £650,000 combined figure to £1m⁹. Without it, a couple's combined nil-rate bands come to £650,000¹⁰.

The £1m only holds if the home is left to children or grandchildren. Leave it to a sibling, a niece or a friend and the residence allowance does not apply, which pulls the couple's total back to £650,000. The £1m also assumes the first partner's allowance was not used up, for example by gifts in the seven years before their death.

Everything left to a husband, wife or civil partner is tax-free

Anything left to a surviving spouse or civil partner is exempt from inheritance tax³. A spouse or civil partner never has to pay tax on assets left to them, regardless of the amount¹¹. Married couples and civil partners can pass assets to each other free from inheritance tax¹².

There is a condition. Assets left to a spouse or civil partner are exempt provided both partners are domiciled in the UK². Domicile is a legal concept separate from residence, and it matters where one partner is not UK-domiciled.

The exemption is what makes the transferable allowances work. Because nothing is taxed on the first death, the first partner's nil-rate band and residence allowance are still unused, and can be claimed by the survivor's executors.

Unmarried couples get none of this. Property left to a spouse is exempt from inheritance tax, and that exemption does not extend to a partner¹³. Unmarried couples cannot inherit each other's unused nil-rate bands, which in effect doubles the allowance for married couples and civil partners⁹. A couple who never marry or form a civil partnership can face inheritance tax on the first death, on assets a married couple would pass across tax-free.

Passing on unused allowances to the surviving partner

When the second partner dies, the executors can add any unused threshold from the first partner's estate to the threshold for the second¹⁴. This is the transferable nil-rate band, and it is claimed, not given: the executors have to apply for it.

The transfer covers both parts. A surviving partner can inherit up to £500,000 of unused inheritance tax allowance, including the £175,000 main residence allowance¹¹. Where the first partner left everything to the survivor, none of their allowance was used, so the full amount transfers.

Married couples and civil partners can pass on unused allowances, which could allow a surviving partner to leave up to £1m⁴. A worked example: a widow inherits her deceased spouse's unused allowances and leaves everything to two children, and should be able to pass on up to £1m free of inheritance tax⁵.

There is a separate, smaller allowance that couples often confuse with this one. Marriage Allowance lets you transfer up to £1,260 of your income tax Personal Allowance to your husband, wife or civil partner¹⁵. It applies during your lifetimes and reduces income tax, not inheritance tax. It is available where the transferring partner is not liable to income tax above the basic rate, and the recipient is not either¹⁶.

The family home: the £175,000 residence allowance

The residence nil-rate band is £175,000 per person, for those leaving their main home to a direct descendant¹⁷. It sits on top of the £325,000 nil-rate band, so a single person leaving a home to a child can pass on £500,000 before inheritance tax applies¹¹.

For couples, the allowance transfers in the same way as the nil-rate band. Married spouses and civil partners can apply any unused allowance of their deceased partner, meaning they could pass on up to £350,000 of residence allowance between them⁹. Combined with two nil-rate bands, that is the £1m.

Two conditions matter. The property must be your main home, and it must go to a direct descendant, meaning a child or grandchild. The allowance is also tapered away for larger estates, so it does not apply in full to everyone.

Unused pensions will count towards the estate

This is the biggest change on the horizon. From 6 April 2027, any unspent pensions will count towards the value of your estate when inheritance tax is calculated⁸. Most unused pension funds and death benefits would be included in the value of a person's estate for inheritance tax from that date¹⁸.

The government has said that bringing unspent pensions into the scope of inheritance tax will affect around 8% of estates each year¹⁹. More than three quarters of the estimated 213,000 estates annually with inherited pension wealth would have no inheritance tax liability¹⁸. The maximum possible charge on unused funds or death benefits is 40%¹⁸.

The change hits unmarried couples hardest, because a surviving spouse or civil partner is expected to remain outside the charge. One worked example in the reporting: an estate including a £330,000 pension, inherited from an unmarried partner, faces £110,000 of tax after April 2027, where the bill today would be £0¹⁹.

When tax is due on the second death and who pays it

Inheritance tax must be paid by the end of the sixth month after the person dies to avoid interest⁷. Interest is charged from the first day of the seventh month after the month in which the person died²⁰. The tax is usually paid before beneficiaries receive the inheritance¹.

You do not usually owe any tax on an inheritance at the time you inherit it²¹. The estate pays, not the person receiving the money, which is why executors deal with the bill before distributing anything.

Debts and liabilities such as household bills, mortgages, credit card debts, gambling debts and funeral expenses can be deducted from the value of the assets²². That reduces the net estate on which tax is worked out. Where someone has died and has not left any estate, a debt write-off can be requested²³.

If the estate cannot pay in one go, instalments are possible. You can pay in instalments if at least 20% of the total inheritance tax the estate owes is on assets that qualify, or if paying it in one lump sum will cause financial difficulties⁷. You will not pay any interest on the first instalment unless you pay late⁷. For any new assets inherited from 6 April 2026 onwards, instalments are interest-free if the asset qualifies for Agricultural Relief or Business Relief⁷.

Some couples cover the expected bill with insurance. Dual life insurance, sometimes called joint life second death insurance, pays out only if and when the second person dies during the term, and is usually used to cover a large inheritance tax bill²⁴.

Gifts, charity and the seven-year rule

Gifts of property or money given away before death count towards the estate valuation for up to seven years⁶. Gifts made more than seven years before death do not form part of the estate, regardless of their value, and must be made without reservation, so the giver cannot benefit from them¹⁰. If you survive seven years after making the gift, no inheritance tax is due on it²⁵.

As a couple, you can usually give away £6,000 per year as standard, and potentially £12,000 if you made no substantial gifts the year before²⁶. These annual exemptions sit alongside the seven-year rule.

Charity offers a different lever. If you leave at least 10% of your net estate to charity you may qualify to pay inheritance tax at a reduced rate⁶. The rate falls from 40% to 36% where 10% or more of the net value of the estate is donated²⁷. If you leave 10% or more of your net estate to charity, the overall inheritance tax rate is reduced to 36%²⁷.

Where to get help

If you are dealing with an estate, the practical steps after a death are set out by Independent Age and by Citizens Advice Scotland, which covers after-death estate administration¹⁴. National Debtline covers debts after death in England and Wales¹³. For Scotland, mygov.scot has inheritance tax support⁶.

For free, impartial guidance on pensions and how they interact with an estate, Pension Wise offers appointments²⁸. MoneyHelper and the debt advice charities can help where an estate or a survivor is struggling with debts.