Can Inheritance Tax Be Passed to Spouse? Understanding UK IHT Rules for Married Couples and Civil Partners

When one spouse or civil partner dies, it’s natural for the surviving partner to worry about the financial implications - including whether they’ll have to pay Inheritance Tax (IHT).

A common and understandable question we hear at Belgravia Capital Wealth Management is:

“Can inheritance tax be passed to spouse?”

The answer is reassuring: no - not directly. In fact, UK inheritance tax law offers generous exemptions for spouses and civil partners.

Not only can assets be passed tax-free between spouses, but the unused tax-free allowance from the first death can be transferred to the survivor’s estate - significantly reducing or even eliminating future IHT liability.

In this in-depth guide, we’ll explain:

• How IHT works for married couples and civil partners

• Whether inheritance tax can ever be “passed on”

• How to transfer unused allowances

• The importance of correct wills and estate planning

• And how to avoid the pitfalls that still catch many families out

What Is Inheritance Tax (IHT) and When Is It Charged?

Inheritance Tax is a tax on the estate (property, savings, investments, and possessions) of someone who has died.

As of 2025, the key thresholds are:

• £325,000 Nil-Rate Band (NRB): The basic tax-free allowance

• £175,000 Residence Nil-Rate Band (RNRB): Applies when a main residence is passed to direct descendants

• 40% Tax Rate: Charged on the portion of the estate above the available thresholds

The total tax-free threshold can rise to £1 million for married couples or civil partners, as we’ll explain shortly.

Is Inheritance Tax Payable When a Spouse Dies?

In most cases, no. The UK has a generous spousal exemption:

Any assets left to a spouse or civil partner are completely exempt from inheritance tax - regardless of the value.

This exemption only applies if:

• The surviving partner is domiciled in the UK (different rules apply if they are not)

• They are legally married or in a civil partnership (unmarried couples do not qualify)

So if one spouse dies and leaves their entire estate to the other, no IHT is payable, no matter how large the estate is.

Can Inheritance Tax Be “Passed” to a Spouse?

If by “passed” we mean passed as a liability, then the answer is no. There is no IHT payable on the transfer of wealth between spouses. However, the tax burden may be deferred to the second death.

Here’s how it works:

• When the first spouse dies and leaves everything to the surviving partner, their estate is exempt from IHT

• But when the surviving spouse dies, the total estate (including what they inherited) may exceed the IHT threshold

• IHT may then be due — unless proper planning is in place

So while IHT isn’t passed like a debt, wealth passed to a spouse could eventually become taxable on the second death if not managed.

What Happens to the Nil-Rate Band After the First Death?

If the first spouse does not use their £325,000 nil-rate band (because everything went to their spouse), that allowance is not lost - it can be transferred to the surviving spouse’s estate.

Similarly, if the first spouse didn’t use their residence nil-rate band (RNRB), that can also be transferred.

Example:

• John dies in 2020 and leaves his entire estate to his wife, Mary - no IHT is due

• Mary dies in 2025 with an estate worth £1.2 million

• She inherits John’s unused allowances:

  
  

  • £325,000 (NRB)

  • £175,000 (RNRB)

  
  

• Combined with her own allowances, her tax-free threshold is:

  
  

  • £650,000 + £350,000 = £1 million

  
  

• Mary’s estate can pass on £1 million tax-free — no IHT is due

This is the foundation of the widely discussed “£1 million IHT allowance” for couples.

How to Claim Transferable IHT Allowances

The transfer of allowances is not automatic. The executor or personal representative must:

• Submit form IHT402 alongside the IHT return (form IHT400)

• Provide details of the deceased spouse’s estate

• Include death and marriage certificates

• Show how much of the nil-rate band was unused

It doesn’t matter how long ago the first spouse died - as long as they passed away after 1975, the transferable allowance can be claimed.

What About the Residence Nil-Rate Band for Inheritance Tax?

This additional allowance of £175,000 per person applies only if:

• The main home is passed to direct descendants (children, grandchildren, etc.)

• The estate is worth less than £2 million (after which the allowance tapers)

If the first spouse didn’t use their RNRB, the unused portion can also be transferred.

But this can be lost if:

• The home is sold or downsized without replacement

• The estate exceeds the £2 million threshold

• The will doesn’t leave the home to direct descendants

Proper will structuring and lifetime planning are essential to preserve the RNRB.

Can Unmarried Partners Avoid Inheritance Tax?

Unfortunately, no - unmarried partners do not benefit from the spousal exemption. This means:

• Any inheritance left to a partner is subject to IHT above the standard thresholds

• The surviving partner cannot inherit the deceased’s unused allowances

This is why it’s vital for long-term partners to consider:

• Getting married or forming a civil partnership

• Using trusts or lifetime gifts

• Taking out life insurance written in trust to cover potential IHT

What If the Surviving Spouse Remarries?

Remarrying does not invalidate the transferable allowances from a previous spouse. The surviving partner:

• Keeps the transferable nil-rate band from their first spouse

• May also gain access to their new partner’s allowances later

However, only one previous unused nil-rate band can be claimed, even if someone has had multiple spouses who died.

Strategies to Reduce IHT on Second Death

While the spousal exemption protects wealth on the first death, the real planning challenge is to reduce IHT on the second death.

Strategies include:

1. Gifting Assets During Life

• PETs fall outside the estate after 7 years

• Annual exemptions and regular gifts from income help reduce the estate

2. Life Insurance in Trust

• Provides funds to pay the IHT bill

• Keeps the payout outside the estate

3. Trust Planning

• Protects assets

• Reduces taxable estate

• Allows flexible control of wealth

4. Leaving 10% to Charity

• Reduces IHT rate on the rest of the estate from 40% to 36%

5. Asset Rebalancing

• Use Business or Agricultural Relief

• Restructure ownership (e.g. tenants in common) for tax efficiency

Don’t Forget the Importance of a Will

A properly drafted will is critical. It ensures:

• The spousal exemption applies correctly

• Residence nil-rate band is preserved

• Allowances are structured for maximum use

• Trusts are integrated where needed

Without a will, assets are distributed under intestacy rules - which can lead to unintended IHT consequences.

Common Misconceptions About Spousal IHT

• “My estate is safe because I’m married.”

  
  

  • Only safe from IHT on the first death. Second death planning is vital.

  
  

• “I don’t need a will — everything goes to my spouse.”

  
  

  • That may be true now, but a will is essential for controlling second-death planning and allowances.

  
  

• “IHT only affects the wealthy.”

  
  

  • With UK house prices, especially in London and the South East, many “ordinary” families exceed the thresholds.

  
  

How Belgravia Capital Wealth Management Can Help you Avoid Inheritance Tax

At Belgravia Capital, we provide expert IHT guidance tailored to couples. We help with:

• Assessing your current IHT exposure

• Structuring wills to maximise allowances

• Reviewing ownership of property and investments

• Trust planning and lifetime gifting strategies

• Insurance and cash flow planning for estate liquidity

Whether you’re newly married or revisiting plans after decades together, we make sure your legacy is protected.

Conclusion: Can Inheritance Tax Be Passed to Spouse?

Yes - in so much as there inheritance tax is not payable between spouses or civil partners.

The spousal exemption ensures wealth can be transferred tax-free, and unused allowances can be passed on to maximise IHT savings for the family.

But the challenge lies in planning beyond the first death. Without the right strategies, the surviving partner’s estate could face a substantial IHT bill - one that could have been avoided.

Early action, strategic structuring, and the right advice can preserve your family wealth for generations.

Contact Belgravia Capital Wealth Management at contact@belgraviacapital.co.uk to explore your spousal inheritance tax options and secure your legacy.