Can Inheritance Tax Be Passed to a Spouse? What Every UK Couple Needs to Know

Belgravia Capital
7 days ago
4 min read

When planning your estate as a couple, one of the most crucial questions to answer is:

“Can inheritance tax be passed to a spouse?”

At Belgravia Capital Wealth Management, we hear this often - and for good reason.

Understanding how Inheritance Tax (IHT) applies to spouses and civil partners can help you avoid costly mistakes and structure your estate more efficiently.

The good news is: the UK offers generous tax exemptions for spouses - but there are key rules and planning opportunities to be aware of.

In this article, we explain how inheritance tax works for married couples, what happens when one partner dies, and how to make the most of transferable tax allowances.

The Spouse Exemption: No IHT on Transfers Between Spouses

One of the most powerful IHT reliefs in the UK is the spouse exemption.

If you leave your estate to your UK-domiciled spouse or civil partner, there is no inheritance tax, regardless of the size of your estate.

This exemption applies to:

Assets left in a will
Gifts made during your lifetime
Transfers of property, cash, investments, and possessions

This means that when the first spouse dies, the surviving partner can inherit everything tax-free - and without using any of their own tax-free allowance.

What Happens with IHT When the Second Spouse Dies?

Here’s where planning becomes critical.

When the second partner dies, the estate becomes subject to inheritance tax above the available thresholds.

As of 2025, the standard allowances are:

£325,000 nil-rate band (NRB)
£175,000 residence nil-rate band (RNRB) (if passing the main home to children or grandchildren)

The key benefit for couples:

If the first spouse didn’t use their allowances (because everything passed to the surviving spouse), those unused allowances are transferable.

So when the second spouse dies, the estate can claim:

Their own £325,000 NRB + 100% of their partner’s unused NRB = £650,000
Their own £175,000 RNRB + 100% of partner’s = £350,000
Total tax-free estate: £1 million

How to Transfer Inheritance Tax Allowances Between Spouses

When the second partner dies, the executor or administrator must:

Submit form IHT402 to claim the unused nil-rate band
Submit form IHT436 to claim the unused residence nil-rate band (if applicable)
Provide the death certificate, marriage certificate, and details of the first spouse’s estate

These forms are sent to HMRC alongside the IHT400 (main inheritance tax return).

It’s essential to plan in advance and ensure records are available to support the claim.

What If the First Spouse Used Part of Their Inheritance Tax Allowance?

Even if the first spouse used some of their tax-free allowance (e.g. by leaving assets to others), the unused portion can still be transferred.

Example:

First spouse used £130,000 of their £325,000 NRB
£195,000 (60%) remains unused
The second spouse’s estate can claim an additional 60% on top of their own allowance

The transferred allowance is based on percentage, not the original monetary amount - which preserves its value over time, even if thresholds increase.

Does This Apply to Unmarried Couples?

No. The spouse exemption and transferable allowances only apply to married couples and civil partners.

If you are in a long-term relationship but not legally married or civilly partnered:

Transfers between you are not exempt
Inheritance tax is calculated based on the usual thresholds
You may need to consider lifetime gifts, trusts, or insurance planning to reduce tax

This is a major consideration when deciding whether to formalise your relationship from a tax perspective.

What About Foreign-Domiciled Spouses?

The spouse exemption is limited when passing assets to a non-UK-domiciled spouse.

The exemption is capped at £325,000
Beyond this, IHT may be due

However, the non-domiciled spouse can elect to be treated as UK-domiciled for IHT purposes, which restores the full spouse exemption - but comes with tax implications on their worldwide estate.

This is a complex area and should be handled with specialist advice.

Can Spouses Avoid Inheritance Tax Altogether?

Yes - with proper planning, married couples can often avoid IHT completely on the first death and up to £1 million tax-free on the second.

But only if:

The estate is structured properly
Allowances are fully claimed
Residence rules are followed
Documentation is in place

If your estate is above £1 million, additional strategies may be needed to reduce exposure (e.g. lifetime gifting, trusts, or insurance).

How Belgravia Capital Wealth Management Can Help with Passing IHT Allowances Between Spouses

We help married couples and civil partners:

Calculate their IHT exposure
Structure their wills and estate plans for maximum efficiency
Ensure allowances are used and transferable amounts are protected
Coordinate with solicitors and HMRC when one partner passes away
Plan for high-value estates with trusts, business relief, and insurance

Our goal is to protect your legacy and ensure your wealth stays in your family.

Conclusion: Can Inheritance Tax Be Passed to a Spouse?

No - inheritance tax isn’t passed on to your spouse, because UK law exempts all transfers between spouses and civil partners.

And when the second partner dies, they can often benefit from double allowances, shielding up to £1 million from tax.

But proper planning is essential to claim these benefits.

Want to make sure your estate plan is structured to avoid unnecessary inheritance tax?