£1 Million Inheritance Tax Threshold UK: How Married Couples Can Pass £1m IHT-Free (2026)
Married couples can pass up to £1 million IHT-free — combining the NRB (£325,000), transferred NRB (£325,000), RNRB (£175,000), and transferred RNRB (£175,000). But this is NOT automatic: the RNRB requires the home to pass to direct descendants, not a discretionary trust, and the estate must stay below £2 million.
| Scenario | NRBs | RNRBs | Total Threshold | Conditions |
|---|---|---|---|---|
| Married couple — both NRBs + both RNRBs (full entitlement) | £650,000 (NRB £325k + tNRB £325k) | £350,000 (RNRB £175k + tRNRB £175k) | £1,000,000 | First spouse's NRB unused; home passes to direct descendant; estate ≤ £2m |
| Married couple — both NRBs, no RNRB (home not qualifying) | £650,000 (NRB £325k + tNRB £325k) | £0 (RNRB conditions not met) | £650,000 | RNRB lost: home in discretionary trust; no home; home to non-direct-descendant |
| Married couple — both NRBs + 1 RNRB only (first spouse's RNRB fully used) | £650,000 | £175,000 (survivor's RNRB only; no transfer available) | £825,000 | First spouse had no qualifying home — no RNRB to transfer. Survivor has own RNRB if home qualifies |
| Married couple — RNRB taper (estate £2.1m) | £650,000 | £250,000 (£350k − £50k taper on £100k above £2m) | £900,000 | RNRB taper: £1 per £2 above £2m net estate; £2.1m estate: taper = £50k; RNRB reduced from £350k to £300k → combined threshold £950k |
| Married couple — RNRB fully tapered (estate ≥ £2.7m) | £650,000 | £0 (both RNRBs fully tapered) | £650,000 | Estate ≥ £2.7m (couple): RNRB taper eliminates both RNRBs; IHT on everything above £650k |
| Single person — maximum threshold (NRB + RNRB) | £325,000 | £175,000 | £500,000 | Home in estate; passes to direct descendant; estate ≤ £2m |
| Single person — NRB only (no RNRB) | £325,000 | £0 | £325,000 | No qualifying home in estate; or home in discretionary trust; or home to non-direct-descendant |
NRB: £325,000 (s4 IHTA 1984; frozen since 2009; frozen to 2030). Transferred NRB (tNRB): s8A IHTA 1984 (Finance Act 2008); claim IHT402 with IHT400; percentage of first spouse's NRB unused on first death, applied to survivor's NRB rate. RNRB: £175,000 (s8D IHTA 1984; introduced April 2017; reached £175k April 2020; frozen to 2030). Direct descendants: s8K IHTA 1984 — biological/adopted/stepchildren, grandchildren, foster children (while under 18); not siblings, nephews, unmarried partners. Transferred RNRB (tRNRB): s8G IHTA 1984; claim IHT436 with IHT400. RNRB taper: s8E IHTA — £1 per £2 above £2m net estate; fully lost at £2.35m (single with own RNRB) / £2.7m (couple with full tRNRB). Discretionary trust: RNRB lost even if children are only beneficiaries. IPDI trust: s8H IHTA — RNRB preserved on survivor's death if remainder to direct descendants. Downsizing addition: ss8FA-8FE IHTA — home sold after 8 Jul 2015; RNRB claimable against other assets; LD1 form on IHT400.
The £1 Million IHT Threshold: Complete Guide
What is the £1 million IHT threshold and who can claim it?
The '£1 million inheritance tax threshold' refers to the combined nil-rate bands available to a surviving spouse or civil partner who inherits from their deceased partner. It is made up of four components: (1) The survivor's own Nil-Rate Band (NRB — s4 IHTA 1984): £325,000; (2) The transferred NRB (s8A IHTA 1984, IHT402): up to £325,000 (the percentage of the deceased spouse's NRB that was unused on first death, multiplied by the survivor's NRB at second death); (3) The survivor's own Residence Nil-Rate Band (RNRB — s8D IHTA 1984): £175,000; (4) The transferred RNRB (s8G IHTA 1984, IHT436): up to £175,000. Total: £325,000 + £325,000 + £175,000 + £175,000 = £1,000,000. Critically: this is NOT an automatic allowance. Each component has conditions that must be met — particularly the RNRB. Many estates miss out on £175,000 or £350,000 of the combined threshold because of planning errors (e.g. home left to a discretionary trust, or estate over the £2 million taper threshold). Only the survivor's estate pays IHT (assuming everything passes to the survivor IHT-free under the spousal exemption — s18 IHTA 1984). The combined threshold is claimed on the second death.
The transferred NRB — how it works and how to claim it
The transferred NRB (transferable nil-rate band — TNRB — s8A IHTA 1984, introduced by Finance Act 2008) works as follows: if the first spouse to die had some or all of their NRB unused, that unused percentage transfers to the surviving spouse. On the second death, the transferred amount boosts the survivor's NRB. Mechanism: on first death, if the entire estate passes to the surviving spouse (under the spousal exemption — s18 IHTA 1984), no NRB is used — 100% of the NRB transfers. If the first spouse left some assets to non-exempt beneficiaries (e.g. children) and used some NRB, only the unused percentage transfers. Example: first death in 2010 — NRB £325,000. First spouse left £100,000 to children (using NRB), £400,000 to spouse (s18 exempt). Unused NRB: £225,000 / £325,000 = 69.2%. On second death in 2026: 69.2% × £325,000 = £225,000 transferred NRB. Claim: form IHT402 submitted with IHT400 on the second death. There is no time limit on claiming the transferred NRB — it can be claimed even if the first spouse died 30 years ago, provided the probate records exist.
The RNRB and transferred RNRB — the most complex part of the £1m threshold
The RNRB (Residence Nil-Rate Band — ss8D-8M IHTA 1984) is the component that most frequently reduces the £1 million threshold in practice. The RNRB requires: (1) A qualifying residential interest: the deceased must have owned a residential property in the estate at death (a property that has been a home at some point during ownership — the deceased's main residence; not an investment property they never lived in). (2) The property must be inherited by a direct descendant (s8K IHTA 1984): lineal descendant — child, grandchild, great-grandchild; stepchildren of the deceased's current or former spouse; adopted children; foster children (fostered while under 18); spouses/civil partners of the above if the direct descendant predeceased. (3) The estate must not exceed £2 million net (RNRB taper — s8E IHTA 1984: £1 reduction per £2 above £2m). For a couple's combined estate, the full £350,000 combined RNRB is lost when the net estate (at second death) exceeds £2.7 million. The transferred RNRB (s8G IHTA 1984) transfers the percentage of RNRB unused on first death. If the first spouse had no qualifying home (e.g. rented accommodation, or home already sold), 100% of the first spouse's RNRB transfers. If the first spouse had a qualifying home but left it to a discretionary trust: RNRB is unused and 100% transfers to the survivor. Claim: form IHT436 submitted with IHT400 on second death. Key trap: if the survivor's home is left to a discretionary trust in the survivor's will, the survivor's own RNRB (and the transferred RNRB) is also lost — reducing the combined threshold by up to £350,000 and potentially increasing IHT by up to £140,000.
Estate over £1 million — what happens to IHT?
The £1 million threshold is the maximum IHT-free amount for a married couple — not an exemption for all assets. For every pound above £1 million (on the survivor's death, assuming full transferred NRBs and RNRBs), IHT is charged at 40%. Example: £1.3 million estate on second death; full £1 million threshold. Taxable: £300,000. IHT: 40% × £300,000 = £120,000. Strategies for estates above £1 million: (1) Charitable legacies (s36 IHTA — 36% rate if 10% of taxable estate to charity): on £300,000 taxable estate, 10% = £30,000 to charity; 36% × £270,000 = £97,200 (saving £22,800); (2) BPR — Business Property Relief (ss103-114 IHTA): qualifying business assets and AIM shares are 100% IHT-exempt after 2 years (up to £1m combined BPR/APR cap from April 2026); (3) Lifetime PETs: give away assets while alive; if survived 7 years, PETs reduce the estate pound for pound; (4) Normal expenditure from income (s21 IHTA): uncapped; regular gifts out of surplus income are immediately IHT-exempt; (5) RNRB taper planning: if the estate is between £2m and £2.7m, reducing the estate below £2m unlocks the RNRB — every £2 removed from the estate (via gifts or spending) unlocks £1 of RNRB (worth 40p in IHT); the effective marginal rate in the taper zone is 60% not 40%.
Common mistakes that reduce the £1 million threshold
Many estates fail to claim the full £1 million combined threshold because of avoidable errors: (1) Home left to discretionary trust in the will — the most common mistake. A discretionary trust (even one where the children are the only beneficiaries) loses the RNRB. RNRB lost = up to £350,000 of combined threshold gone; additional IHT = up to £140,000. Fix: leave the home directly to children (or through an IPDI trust or bare trust for named direct descendants). (2) Failing to claim the transferred NRB — the TNRB is not claimed automatically by HMRC. The personal representatives must complete form IHT402. If the first spouse's probate records are lost, HMRC will accept alternative evidence (old bank statements, valuations, the will) to reconstruct the first death NRB usage. (3) Failing to claim the transferred RNRB — form IHT436 must be submitted. If the first spouse had no qualifying home, 100% still transfers. (4) Estate above £2 million — RNRB taper reduces the combined threshold. An estate of £2.5 million (couple): taper = £1 per £2 above £2m = £250,000 taper; combined RNRB: £350,000 − £250,000 = £100,000. Combined threshold: £650,000 + £100,000 = £750,000. IHT: 40% × (£2.5m − £750k) = £700,000. (5) Downsizing without knowing the downsizing addition rules — if the home was sold after 8 July 2015 and not replaced, the RNRB can still be claimed against other assets (the 'downsizing addition' — ss8FA-8FE IHTA 1984; claim form LD1 on IHT400).
Frequently Asked Questions
What is the £1 million inheritance tax threshold for married couples?
The £1 million IHT threshold is the combined nil-rate band available to a surviving spouse on the second death: NRB £325,000 + transferred NRB (s8A IHTA 1984) £325,000 + RNRB (s8D IHTA 1984) £175,000 + transferred RNRB (s8G IHTA 1984) £175,000 = £1,000,000. It is NOT automatic — conditions apply: (1) first spouse's NRB must have been unused; (2) a qualifying home must be in the estate passing to a direct descendant (s8K IHTA); (3) the net estate must not exceed £2 million (RNRB taper); (4) the home must not be in a discretionary trust. Missing the RNRB conditions reduces the threshold to £650,000.
Does the £1 million IHT threshold apply automatically?
No — it must be actively claimed. The transferred NRB is claimed via form IHT402 (submitted with IHT400 on second death). The transferred RNRB is claimed via form IHT436. There is no time limit for claiming the transferred NRB — it can be claimed even if the first spouse died decades ago. HMRC does not apply these automatically. The RNRB also requires the will to direct the home to direct descendants (children, grandchildren, stepchildren, etc.) — not to a discretionary trust. Many estates forfeit part or all of the £1 million threshold due to poor will drafting.
What happens to the £1 million threshold if one spouse never owned a home?
The RNRB only applies to a qualifying residential interest in the estate at death. If the surviving spouse never owned a home, the survivor's own RNRB (£175,000) is unavailable. However: the transferred RNRB (s8G IHTA 1984) from the first spouse can still transfer — because the first spouse's RNRB was unused (they had no qualifying home). The surviving spouse can use the transferred RNRB against any asset passing to a direct descendant — not just a home. Wait: the RNRB and transferred RNRB can be used against the value of a former home no longer in the estate, under the downsizing addition rules (ss8FA-8FE IHTA 1984), if the home was sold after 8 July 2015.
Does the £1 million threshold apply if the estate is worth more than £2 million?
The RNRB is tapered above £2 million (s8E IHTA 1984): £1 reduction per £2 the net estate exceeds £2 million. For a couple: the combined RNRB (£350,000) is fully lost when the net estate reaches £2.7 million (£350,000 × 2 = £700,000 taper; £2m + £700k = £2.7m). Above £2.7 million: the combined threshold is only £650,000 (NRBs alone — no RNRB). The NRBs (£325,000 + £325,000 = £650,000) are not subject to the taper. In the taper zone (£2m–£2.7m estate), the effective marginal IHT rate is 60% — for every £2 removed from the estate, £1 of RNRB is restored (worth 40p in IHT), plus the £2 itself saves 40p = 60p per £1 gifted.
My spouse's will left everything to a discretionary trust — do we still get the £1 million threshold?
The transferred NRB (IHT402): yes — if the first spouse left assets to a discretionary trust and the trust did not use the first spouse's NRB, the unused NRB transfers to the survivor. The transferred RNRB (IHT436): also yes — if the first spouse's home was in the discretionary trust, the first spouse's RNRB was unused and 100% transfers to the survivor. However: the SURVIVOR's RNRB depends on the survivor's own will. If the survivor's will also leaves the home to a discretionary trust: the survivor's own RNRB (and the transferred RNRB) are both lost on the survivor's death. The combined threshold on second death could be as low as £650,000 (NRBs only) — losing up to £350,000 of threshold and potentially £140,000 in additional IHT. Review and update the survivor's will to direct the home directly to direct descendants.
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