Can Inheritance Tax Allowance Be Transferred in the UK? Understanding Spousal and Nil-Rate Band Transfers

Belgravia Capital
May 31
3 min read

When planning your estate, one of the most powerful tools available to married couples and civil partners is the ability to transfer unused inheritance tax allowances.

If done correctly, it can allow you to pass on up to £1 million tax-free to your beneficiaries.

At Belgravia Capital Wealth Management, we’re often asked:

“Can inheritance tax allowance be transferred?”

The answer is yes - under specific circumstances, and with proper documentation.

In this guide, we explain how the nil-rate band and residence nil-rate band can be transferred, who qualifies, and how to ensure your estate is structured to benefit from this rule.

What Is the Inheritance Tax Allowance?

The Inheritance Tax (IHT) allowance, or nil-rate band (NRB), is the amount of your estate that can be passed on tax-free when you die.

As of 2025:

£325,000 – standard nil-rate band per person
£175,000 – residence nil-rate band per person (when your home is left to direct descendants)

This gives individuals a potential £500,000 IHT-free threshold.

Can Inheritance Tax Allowance Be Transferred?

Yes - between married couples and civil partners only.

When one partner dies and doesn’t use up their full IHT allowance, the unused percentage can be transferred to the surviving spouse or civil partner. This can significantly boost the surviving partner’s tax-free threshold.

How Does the IHT Transfer Work?

Example:

John dies in 2010, leaving everything to his wife, Mary. No IHT is payable due to the spousal exemption.
Mary dies in 2025, with an estate worth £850,000.

Since John didn’t use any of his allowance, 100% of his unused nil-rate band can be transferred to Mary.

Her estate benefits from:

£325,000 (her own nil-rate band), plus
£325,000 (transferred from John) = £650,000 total

Add the residence nil-rate band (if applicable), and the tax-free amount could rise to £1 million.

What Is the Residence Nil-Rate Band (RNRB)?

Introduced in 2017, the residence nil-rate band allows you to pass on your main residence to direct descendants (children, grandchildren, etc.) with an extra £175,000 allowance per person.

Like the NRB, the unused portion of a deceased spouse’s RNRB can be transferred.

So in theory:

Married couples/civil partners can combine their £325,000 NRB + £175,000 RNRB each
That’s £1 million tax-free for their children or grandchildren

How to Claim a Transferred IHT Allowance

The IHT allowance isn’t transferred automatically - it must be claimed by the executor or administrator of the estate.

They must submit:

Form IHT402 alongside the IHT return (IHT400)
Original or certified copy of the death certificate and marriage/civil partnership certificate
Evidence of the deceased’s estate (to show how much of their allowance was unused)

What If the First Partner Used Part of Their Allowance?

If some of the nil-rate band was used (e.g. gifts to non-exempt beneficiaries), only the unused portion can be transferred. HMRC calculates this as a percentage, not a fixed amount.

Example:

David dies in 2010 and used 50% of his NRB.
His wife Margaret dies in 2025.
Margaret can add 50% of the NRB to her own - so her tax-free threshold is £325,000 + £162,500 = £487,500

The same applies to the residence nil-rate band.

Does This Apply to Unmarried Couples?

No — the transfer of inheritance tax allowances is only available to legally married spouses or civil partners.

Unmarried couples must use other estate planning tools, such as:- Lifetime gifting- Trusts- Tenancy in common with a will

Why Transferring the Allowance Matters

Failing to claim a transferable nil-rate band can cost your estate hundreds of thousands of pounds in unnecessary tax.

At 40% IHT, that’s:

£130,000 in tax on £325,000 of unclaimed allowance
£70,000 in tax on £175,000 of unused RNRB

How Belgravia Capital Wealth Management Can Help with IHT Planning

We help families and estate representatives:- Identify unused allowances from previous estates- Prepare and submit IHT400 and IHT402 forms- Calculate estate exposure and maximise exemptions- Coordinate with legal professionals to ensure full compliance.

Conclusion: Can Inheritance Tax Allowance Be Transferred?

Yes - if you are married or in a civil partnership, your unused inheritance tax allowance can be passed on to your partner, and vice versa.

With proper planning, this can shield up to £1 million of your estate from Inheritance Tax - but it’s vital to act early, document clearly, and claim the allowances correctly.

Need help reviewing your family’s IHT strategy?