Make the Most of Spousal Nil-Rate Bands

We’ll explain, in plain English, how couples in the United Kingdom can use spousal nil-rate band rules to reduce inheritance tax and keep more wealth within the family.

We write as an experienced team. We aim to keep things clear and practical. This short guide shows what the nil-rate band is and why it matters.

We’ll show how allowances can be transferred from one spouse or civil partner to another. That can mean a real difference in money left to loved ones.

We’ll also flag common pitfalls — for example, assuming transfers happen automatically. We focus on simple steps for wills, records and estate paperwork so you can act with confidence.

Where estates are larger or the family situation is complex, professional advice can be sensible. We help you spot when that makes good sense.

Key Takeaways

• Clear benefit: Transferring unused allowance can reduce inheritance tax for the surviving spouse.
• Not automatic — paperwork and correct records matter.
• Practical steps on wills and estate forms make the process smoother.
• Doubling allowances can bring significant savings for many families.
• Seek specialist advice for trusts, blended families or large estates.

Understanding Inheritance Tax in the UK for the present tax year context

We begin with the core figures and who they apply to. The present rules mean estate inheritance tax normally touches estates above a fixed threshold. That threshold is set at £325,000 for 2025/26.

Who is caught by the rules? If you are UK-domiciled, liabilities can extend to worldwide assets. Non-domiciled individuals usually face charges only on UK assets.

Above the £325,000 allowance, the standard charge is 40% on the excess. That headline figure makes the maths simple to follow when you value an estate.

• What counts: cash, investments, possessions and your share of any property.
• Why more estates are affected: property values have risen while thresholds remain frozen.
• Practical point: liabilities are normally settled before beneficiaries receive their gifts.

One quick note: individual circumstances change how rules apply. This guide aims to explain the basics so you can check whether a fuller review is sensible.

What the nil-rate band is and why it matters for estate planning

Think of the nil-rate band as your personal tax-free slice of an estate’s value. It is an allowance that each person holds and it forms the base for most sensible estate work.

Per person, that allowance reduces the portion of an estate that faces a 40% charge above the threshold. Couples often protect more than one person can alone because each retains their own band.

Not all unused allowance is the same as ‘no tax due’. Someone may pay no charge on first death but still have used part of their allowance. That difference matters when the survivor’s total estate is valued.

• Why it helps: any unused band from the first death can be added to the survivor’s allowance on the second death.
• Effect on tax liability: the larger the combined allowance, the smaller the estate portion exposed to the 40% charge.
• Watch-outs: gifts, trusts and earlier decisions can change how much allowance remains.

We will next explain why transfers between married couples and civil partners are usually exempt on first death and how to claim the unused proportion later.

Marriage and civil partnership rules: when estates pass to a spouse or civil partner

When one partner dies, the rules that protect transfers between married couples and registered civil partners are often straightforward.

Transfers to a surviving spouse or civil partner are usually exempt from immediate inheritance tax. That means if everything goes to the survivor, the first person’s allowance can remain unused.

That unused allowance is important later. On the second death the survivor can often claim the unused proportion and raise the combined allowance. To make that claim, records and a clear will help.

• Leaving assets to a husband, wife or registered civil partner is normally IHT-free on first death.
• “Registered” means a formal civil partnership; cohabiting couples do not get the same protection.
• Many couples use mirror wills — sensible, but they should be checked periodically.
• Usually IHT-free does not mean no paperwork; documents are needed to claim the unused allowance later.

For more detail on claiming the spouse exemption, see our guide on the spouse exemption.

inheritance tax planning using spouses nil rate bands uk: how the transfer works in practice

A clear claim at the right time can turn unused allowance from the first death into protection for the second estate.

What the transferable nil-rate band means: it lets the surviving estate use any unused percentage of the first person’s nil-rate band. The benefit travels as a percentage, not a fixed cash sum. That percentage is applied to the allowance in force at the second death.

When and who makes the claim

The claim is made on the death of the second spouse or civil partner. Executors and administrators — the personal representatives — must submit the request to HMRC.

Timing and paperwork

There is a two-year window from the date of the second death to make the claim. That is why early record-keeping matters, even if probate feels overwhelming.

How the percentage transfer works

• If 50% of the first person’s allowance was unused, 50% moves across to the survivor’s estate.
• The transferred share scales with the allowance at the second death. That protects families if thresholds change.
• HMRC typically asks for the first estate’s valuation, forms previously submitted and the original death certificate.

Practical tip: gather wills, IHT forms and valuations straight away. That makes the two-year claim smoother and reduces stress for personal representatives.

Eligibility checklist for transferring an unused nil-rate band

A few simple facts determine whether an unused allowance can move across to a surviving partner. Start by confirming the basic conditions before you gather documents.

Core condition

Marital or civil status at first death: the couple must be married or in a civil partnership when the first person passes away. That status is the foundation of any claim.

Common complications

• Partial use of the band: if part of the estate went elsewhere — for example to children — only the unused proportion can transfer.
• Gifts made during life: gifts within seven years before someone passes away can reduce the available band.
• Trusts: assets held in certain trusts may not pass outright and can complicate calculations and eligibility.

Keep a simple paper trail — wills, basic valuations and notes on any gifts made. HMRC may ask for evidence later. Complicated does not mean impossible; if the facts are unclear, we suggest taking specialist advice early to avoid errors.

Step-by-step: calculating how much nil-rate band can be transferred

We’ll take you through a simple worksheet-style method to check how much of the allowance moved across after the first death.

Working out how much of the first estate used the band

First, list assets at the date of the first death and their proven value. Include property, savings and investments that formed the estate.

Subtract any debts. Then note gifts or transfers to people other than the surviving spouse. Those reduce the portion of the band left unused.

How unused band is added to the survivor’s allowance

Convert the unused amount into a percentage of the first person’s allowance. That percentage is what transfers.

Apply that percentage to the allowance in force at the second death to reach the extra protection for the survivor.

What doubling can look like: up to £650,000 combined nil-rate band

Example: if 100% of the first person’s allowance was unused, the surviving spouse can have up to £650,000 (that is £325,000 per person × 2).

For an estate worth £800,000, that extra allowance can cut the tax liability on the portion above the combined threshold. Get formal valuations if totals sit close to limits.

• Checklist: gather valuations, record gifts, and calculate debts.
• Turn the unused amount into a percentage and then apply it to the current allowance.
• When in doubt, seek a professional valuation rather than rely on rough estimates.

How the residence nil-rate band can increase your combined allowance

Leaving the family home to children can add a valuable extra allowance. The residence nil-rate band is an extra headroom linked to your main residence.

What the residence allowance is and when it applies

The residence nil-rate band currently adds up to £175,000. That figure is frozen until 2031, so timing matters when values rise.

It generally applies when you leave your home to direct descendants — for example, children or grandchildren. If the property goes elsewhere, the extra allowance normally does not apply.

How it stacks with the standard nil-rate band

Combine the £175,000 residence allowance with the standard £325,000 nil-rate band and you can reach up to £500,000 per person in the right scenario.

• Example: a single person with a home valued at £500,000 may pay no IHT if the property goes to children and other assets fall within the remaining allowance.
• For couples, transferring unused allowance can lift combined protection significantly.

Practical note: wording in wills and who inherits the property must be clear. Small differences in ownership or beneficiary choice can change whether the residence allowance applies.

Valuing an estate correctly before you plan or claim

Knowing the true worth of your assets stops costly surprises later. A clear valuation tells you what allowances and liabilities may apply after death.

What to include

List property and land, savings, investments and valuable possessions. Include overseas assets where they are yours.

Note the part you own when assets are shared. Your share only counts, not the whole item.

What else counts

Certain trust interests and gifts made within seven years of death can affect the total. These items may reduce available allowances and increase liability.

What you can deduct

Subtract genuine debts such as mortgages, loans and funeral costs to reach a net estate value.

Tip: keep a simple estate folder with valuations, deeds and records of gifts. It makes claims and probate quicker and less stressful.

• We recommend gathering valuations and documents now to help executors later.

Property ownership and “share of the home”: why it changes the IHT calculation

How you hold a property can change the part of the home that forms part of your estate.

In plain terms: if you co-own a property, only the value of your share counts when the estate is valued. That can reduce what falls into the estate and change whether any liability arises.

How co-ownership affects what is counted

Joint tenants usually mean the survivor gets the whole property automatically. In that case, the deceased’s share may not form part of their estate.

Tenants in common let you own a defined part. If you own 50% and leave that to direct descendants, only that 50% appears in your estate value.

• Example: a property valued at £400,000. A 50% share counts as £200,000 toward the estate.
• That part estate figure feeds into any residence allowance and wider estate calculation.
• Title arrangements and will wording can change the outcome, so check both.

Simple action: confirm how the property is held, check the will and keep clear records. Treat your home and its part share as central to estate paperwork — not an afterthought.

Documentation you’ll need to support a transferable nil-rate band claim

A clear paper trail makes claims easier for everyone involved. We explain the practical documents that help prove how much allowance was unused after the first death.

Core paperwork

Start with death certificates, the will and up-to-date estate valuations. These show who inherited what and the value at the date of death.

Evidence HMRC may ask for

Record gifts, especially those made in the seven years before death. Collect mortgage statements, loan letters and proof of other liabilities to confirm the net estate.

• Original death certificates and wills
• Valuations for property, savings and investments
• A gifts history covering the last seven years
• Proof of mortgages, loans and other debts
• Earlier inheritance tax forms, if they exist

Tip: keep one folder per person and a simple gifts log. It saves time for executors and reduces stress.

We advise treating records as protection, not paperwork for its own sake. Good files can reduce delays and help avoid unnecessary tax for the family.

Key timings: when inheritance tax is due and how probate fits in

Timing matters: several deadlines and checks shape how an estate moves through probate and settlement.

The six-month payment deadline and interest on late payment

What to know: the main liability is due within six months of the date of death. If payment is late, interest starts to accrue.

Why probate and valuation are linked

In many cases you cannot get the grant of probate until the estate is valued and any tax is dealt with. Executors must gather valuations to show what is owed.

Paying by instalments for qualifying assets

If an estate is asset-rich but cash-poor, there are options to pay over time. Property often qualifies for instalments so the estate does not have to sell immediately.

Practical point: doing valuations early reduces delays, interest and uncertainty for beneficiaries.

We recommend early action and simple records. If the estate holds property or complex assets, get prompt advice to manage timing and cost.

Lifetime gifts and how they interact with nil-rate bands

Gifts can be a simple way to move wealth while you are alive, but the rules are not always straightforward.

Common exemptions make some transfers free from immediate liability. Transfers between married partners are generally exempt. You also have an annual £3,000 allowance and small gifts up to £250 each.

Potentially exempt transfers (PETs) become chargeable if the giver dies within seven years. After three years, taper relief may reduce the charge on gifts that survive the initial period.

Gifts with reservation of benefit can backfire. For example, giving away your home but living there rent-free can mean the property still forms part of the estate.

Who pays when a gift becomes chargeable? Executors normally sort the bill, but beneficiaries can face liability if the estate cannot meet the amount.

Tip: keep a simple gifts log with dates, amounts and recipients. Accurate records make it far easier to claim unused allowance later and help executors and HMRC.

For more on how transfers between married partners work in practice, see our guide to the rules for married couples.

Trusts, reliefs and insurance: options that complement spousal allowances

Trusts and reliefs give families practical ways to shape who benefits and to reduce an estate’s exposure. They do not replace spousal allowances but sit alongside them. For many couples, these tools add useful flexibility.

Using trusts to control access and reduce estate exposure

Trusts let you set conditions on gifts. You can choose when beneficiaries get money. That control can protect vulnerable heirs and preserve assets.

In some cases, assets placed into the right kind of trust leave the estate for valuation purposes. That can reduce the sum that faces a charge, subject to strict rules and periodic tests.

Business relief and agricultural relief

Certain qualifying assets may receive relief from the valuation used to assess liability. Business relief can apply to trading companies, while agricultural relief may help farm owners. Both may reduce the taxable value of those assets.

• Business relief can lower the estate figure for qualifying shares and business interests.
• Agricultural relief can protect farmland and working farm assets where conditions are met.

Whole-of-life cover written in trust to fund a bill

Putting whole-of-life insurance in trust is a straightforward way to fund a bill. The payout can be out of the estate and reach beneficiaries quickly.

That avoids forced sales of property and keeps funds available to executors.

Practical note: trusts and reliefs are technical. Correct setup and regular review are essential to make them work as intended.

We recommend seeking specialist advice before you act. Good advice helps match the right trust or relief to family goals and keeps administration manageable.

Common mistakes that reduce the benefit of spousal nil-rate bands

Too often families assume an unused band simply moves across without any action. That belief is costly.

Claim is usually required. The transfer does not happen automatically. Executors must make a formal claim, normally after the second death.

Missing the two-year window or poor records

The claim often has a strict two-year deadline. Grief and probate tasks mean the deadline is easy to miss.

Keep documents safe: wills, valuations, mortgage statements and earlier forms.

Overlooking gifts, trusts or property share issues

Gifts made in the seven years before death, interests in trusts and the part of a property you own can all change the calculation.

Failing to record these details can reduce the transferable band and raise the amount of tax payable.

Practical prevention tips

• Update wills and record any gifts each year.
• Store valuations and mortgage statements in one folder.
• Ask for clear advice early and pressure-test your arrangements now.

Small steps now save families time, money and stress later.

For full rules and a practical guide to claiming the unused allowance, see our detailed note on spousal transfer rules.

Planning scenarios for couples with larger estates and family homes

A small change in wills can prevent valuable allowances from being lost on the first death.

We outline realistic scenarios for couples whose property makes up most of their estate. Clear wills can protect the survivor while preserving access to combined allowances for the second death.

Aligning wills so allowances are not wasted on first death

Couples often choose mirror wills. That helps, but a simple clause can ensure the survivor has security while unused allowance is preserved for later.

Example: leave the home to a surviving partner but set an instruction that the property passes to children on the second death. This keeps the residence allowance eligible.

Combining standard allowance and residence allowance for children

When a home goes to direct descendants, the standard £325,000 allowance and the £175,000 residence allowance can stack. That can give meaningful extra shelter for estates where the home is valuable.

Practical tip: wording must be precise. If the home goes elsewhere, the extra residence protection may be lost.

Stress‑testing plans against frozen thresholds and rising property values

With thresholds frozen and house prices up, a once-safe plan can become vulnerable. We suggest simple stress tests: revalue the property and run scenarios where values rise 10–30%.

• Review wills after downsizing, remarriage or major family changes.
• Consider trusts, gifting or life cover early — they take time to set up.
• Keep records tidy so claims are straightforward for personal representatives.

“Regular reviews and careful will drafting are the best defence against unexpected liabilities.”

For a focused walkthrough of how much can be passed tax-free and the mechanics of claims, see our short note on the nil-rate band transfer.

Conclusion

A few straightforward actions now can reduce what an estate pays later and ease the burden on loved ones.

For many couples, transferring an unused nil-rate band can be one of the simplest ways to cut inheritance tax. Remember the headline numbers: a £325,000 standard allowance and a 40% charge on amounts above that, with an extra residence allowance in some cases.

Practical steps protect families: clear wills, up-to-date valuations, a simple gifts record and a timely claim after the death of the surviving spouse. The transfer works as a percentage and must be claimed, so good records matter.

Review your estate planning regularly. With clear steps now, more of your estate can pass to the people you love — not an unnecessary bill.