Does a Spouse Pay Inheritance Tax in the UK?

One of the most frequently asked questions in estate planning is, does a spouse pay inheritance tax? It’s a crucial consideration for couples planning their financial legacy. The answer depends on several factors, including your legal status, where you live in the UK, and the value of the estate.

This comprehensive guide breaks down inheritance tax rules for spouses in the UK, covering exemptions, transfers, thresholds, and practical planning tips. If you’re concerned about what happens financially when one partner passes away, read on to get clear, reliable answers.

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Understanding Inheritance Tax for Married Couples

In the UK, inheritance tax (IHT) is a tax on the estate (property, money, and possessions) of someone who has died. But does a spouse pay inheritance tax? In most cases, the answer is no. Under current HMRC rules, assets passed between spouses and civil partners are generally exempt from inheritance tax.

What Is the Spouse Exemption?

The spouse exemption means that when one spouse or civil partner dies, their entire estate can be passed on to their surviving partner tax-free—regardless of the estate’s value. This only applies if:

• You are legally married or in a civil partnership
• Your partner is domiciled in the UK

Unmarried partners—even if cohabiting—do not qualify for the spouse exemption and may be liable for inheritance tax.

Visit GOV.UK’s guide on Inheritance Tax for official information.

Thresholds and the Nil Rate Band

Every individual in the UK has an IHT threshold, also known as the nil rate band. As of 2024, this threshold is £325,000. If your estate is worth less than this amount, no inheritance tax is due. If it’s worth more, 40% tax applies to the amount over the threshold—unless an exemption (like the spouse exemption) is in place.

Can the Threshold Be Transferred?

Yes. If one spouse dies and leaves everything to the surviving partner, they don’t use their £325,000 threshold. This unused allowance can then be transferred to the surviving spouse, effectively doubling their tax-free threshold to £650,000 when they pass away.

There is also a residence nil rate band that offers additional relief when passing a home to direct descendants, such as children or grandchildren.

Does a Spouse Pay Inheritance Tax on Property?

Another common concern is: does a spouse pay inheritance tax on inherited property? If the property is left to a spouse or civil partner, it falls under the same exemption rules—so no IHT is payable. This applies whether the property is jointly owned or solely owned by the deceased.

Implications for Joint Ownership

For properties held as joint tenants, ownership passes automatically to the surviving spouse and is exempt from IHT. If held as tenants in common, each partner’s share can be passed via their will—but again, the spouse exemption still applies.

It’s worth seeking professional advice for property ownership structuring. Our estate planners can guide you through Inheritance Tax planning strategies designed to protect family assets.

Leaving Property to Children

If the property is left to children or grandchildren rather than a spouse, inheritance tax may be payable depending on the estate’s value and whether thresholds have been exceeded. That’s where family trusts and lifetime gifts come into play for tax mitigation.

When Does a Spouse Pay Inheritance Tax?

There are some rare situations where a spouse may have to pay inheritance tax. These include:

• If the deceased spouse was domiciled abroad and left a UK estate
• If the estate includes foreign assets and cross-border tax rules apply
• If gifts were made within seven years of death and not covered by exemptions

Tax rules can become more complex in international or high-value estates. In such cases, we recommend scheduling a personal consultation for tailored advice.

Planning Ahead: How to Minimise Inheritance Tax

While spouses typically don’t pay IHT when one partner dies, the second death can result in significant tax unless you plan ahead. Consider these strategies to protect your estate:

1. Make a Will

Having a professionally drafted will ensures your estate passes according to your wishes and may help reduce tax liabilities. It’s also vital for claiming the full nil rate band.

2. Use Trusts

Family trusts can help remove assets from your estate and reduce IHT liability. For example, a discretionary trust lets you retain some control while minimising the value of your estate for tax purposes.

3. Lifetime Gifts

You can give away money or property during your lifetime. If you survive for seven years after making a gift, it’s usually exempt from IHT. These are called Potentially Exempt Transfers (PETs).

4. Take Out Insurance

An insurance policy written in trust can cover any future IHT bill, helping your beneficiaries avoid a large tax liability when the second spouse passes away.

5. Get Professional Help

Inheritance tax is complex, and the cost of getting it wrong can be high. Working with a specialist ensures your estate is protected and your loved ones benefit fully.

See our estate planning packages or book a free call to get expert guidance today.

FAQs: Inheritance Tax and Spouses

Is there a limit to what I can leave my spouse tax-free?

No. If your spouse is UK-domiciled, there’s no limit. You can leave your entire estate to them free of inheritance tax.

What if we are not married?

Unmarried partners do not qualify for the spouse exemption. Inheritance tax may apply if the estate exceeds £325,000. Consider legal arrangements such as trusts or civil partnership registration.

What happens after both spouses die?

Inheritance tax may apply to the estate passed on to children or others. However, the second spouse can usually use both nil rate bands, giving a tax-free threshold of up to £650,000 (or more with the residence nil rate band).

Do I need to inform HMRC if my spouse dies?

Yes, especially if the estate is large. HMRC must be informed, and probate may be required to access assets. Your solicitor or estate planner can guide you through this process.

Conclusion: Does a Spouse Pay Inheritance Tax?

To answer the question clearly—does a spouse pay inheritance tax in the UK?—the answer is generally no. Transfers between married partners and civil partners are exempt. However, good estate planning is essential to ensure that when both partners pass away, the estate passes efficiently and tax-effectively to beneficiaries.

With expert guidance, you can make use of exemptions, thresholds, and tax planning tools to minimise liability and protect your family’s future.

Book a free estate planning consultation today or visit our Inheritance Tax Planning page to learn more about your options.