IHT for Cohabiting Couples UK: Inheritance Tax for Unmarried Partners (2026 Guide)
Unmarried partners get no IHT spousal exemption — 40% tax applies on everything above £325,000. No transferable nil rate band. No automatic inheritance rights without a will. This guide explains the full position and what you can do about it.
IHT Position for Unmarried Couples
The fundamental IHT problem for cohabiting couples
Married couples and civil partners benefit from the unlimited spousal exemption under s18 IHTA 1984 — gifts between them, including on death, are completely exempt from IHT regardless of amount. Cohabiting (unmarried) partners have no equivalent exemption. When one partner dies and leaves everything to the other, the surviving partner pays 40% IHT on the estate above the nil rate band (£325,000 in 2026/27). There is no 'common law marriage' for IHT — the law does not recognise cohabitation as equivalent to marriage for tax purposes. Two people living together for 40 years are, for IHT purposes, two strangers. The only way to obtain the spousal exemption is to marry or enter a civil partnership.
No transferable nil rate band between cohabiting partners
The transferable nil rate band (TRNRB) under s8A IHTA 1984 allows a surviving spouse or civil partner to inherit the unused NRB from their deceased spouse. A widow inheriting the full NRB could effectively have a £650,000 NRB at their own death. This right does not extend to cohabiting partners. If Partner A dies and leaves everything to Partner B (unmarried), Partner B's NRB at their own death remains £325,000 (plus any RNRB available). The TRNRB that would have been available on a spousal inheritance is lost entirely. This compares unfavourably with married couples, who can preserve double the NRB by structuring the first death correctly.
No automatic inheritance rights without a will
The intestacy rules (Administration of Estates Act 1925) give no rights to a cohabiting partner. If Partner A dies without a will, Partner B receives nothing under the statutory intestacy order — everything passes to children, parents, or siblings (in that order). The cohabiting partner may be left homeless if the property was in the deceased's sole name, and with no access to the deceased's savings or investments. The Inheritance (Provision for Family and Dependants) Act 1975 allows a cohabiting partner to make a claim if they were financially maintained by the deceased — but this requires court proceedings, is uncertain in outcome, and is financially and emotionally costly. A will is the only reliable solution.
Residence Nil Rate Band: limited availability for cohabiting couples
The Residence Nil Rate Band (RNRB, up to £175,000 in 2026/27) reduces IHT on the family home when it is 'closely inherited' by direct descendants — children (biological or adopted) or grandchildren. It does not apply where the home passes to a cohabiting partner. If Partner A leaves the home to Partner B (not a direct descendant), the RNRB is not available on Partner A's death. The RNRB is available if the home eventually passes to the couple's children — either directly or via Partner B's own will — but the opportunity to use Partner A's RNRB on the first death may be lost depending on how the estate is structured.
IHT planning strategies for cohabiting couples
Several strategies can reduce the IHT burden for cohabiting couples: (1) Make wills — the minimum step; each partner should leave their estate to the other under a will. Without a will, intestacy leaves the surviving partner with nothing. (2) Life insurance in trust — a life policy written in trust for the partner pays out tax-free and avoids both IHT and probate delays. This is the most efficient way to fund a potential IHT liability. (3) Potentially exempt transfers (PETs) — gifts between cohabiting partners during lifetime start the 7-year clock. Gifting assets now reduces the eventual estate. (4) Property as tenants in common — owning the property as tenants in common (rather than joint tenants) allows each partner's share to pass under their will to children while giving the surviving partner a right to occupy via a life interest trust. This preserves the RNRB on the second death and protects against care fee means-testing. (5) Nil rate band trust — a will trust that puts the NRB into a discretionary trust on first death can give the surviving partner access to funds while keeping the amount outside their estate. (6) Consider marriage — marriage is the simplest and most comprehensive solution if the relationship is secure. Marriage creates the spousal exemption, TRNRB, and automatic inheritance rights.
Cohabiting couples and the Inheritance Act 1975
A surviving cohabiting partner who was financially dependent on the deceased may make a claim under the Inheritance (Provision for Family and Dependants) Act 1975. To claim, the partner must have been maintained by the deceased immediately before death (s1(1)(e) IA 1975). The court has discretion to award provision from the estate — but 'reasonable financial provision' for a cohabiting partner is assessed against the maintenance standard (what is needed to maintain them), not the higher spousal standard (what is fair having regard to all the circumstances). Courts consider the length of the relationship, the claimant's resources, contributions to the household, and the deceased's obligations to other dependants. The claim must be made within 6 months of the grant of probate. IA 1975 claims are uncertain, costly, and acrimonious — they are no substitute for a well-drafted will.
Frequently Asked Questions
Do cohabiting couples pay inheritance tax when one partner dies?
Yes — and in full. Cohabiting (unmarried) partners have no spousal IHT exemption. When one partner dies and leaves everything to the other, the surviving partner pays 40% IHT on the estate above the nil rate band (£325,000 in 2026/27). There is no 'common law marriage' exemption for IHT. The unlimited spousal exemption under s18 IHTA 1984 applies only to married couples and civil partners. Length of the relationship makes no difference.
Can a cohabiting partner inherit the nil rate band from the deceased partner?
No. The transferable nil rate band (s8A IHTA 1984) is available only to surviving spouses and civil partners. A cohabiting partner who inherits from their deceased partner cannot transfer the deceased's unused NRB to their own estate. The NRB is not doubled for cohabiting couples — each partner has only their own £325,000 NRB. This is a significant disadvantage compared to married couples.
What happens if a cohabiting partner dies without a will?
The surviving partner receives nothing under the intestacy rules (Administration of Estates Act 1925). The estate passes to children, then parents, then siblings — in order — regardless of how long the couple had been together. The surviving partner may need to bring a claim under the Inheritance (Provision for Family and Dependants) Act 1975, which is uncertain, expensive, and time-consuming. Making a will is the only reliable way to protect a cohabiting partner.
How can cohabiting couples reduce their IHT exposure?
Key strategies include: (1) Making wills — leaving the estate to each other; (2) Life insurance written in trust for the partner (tax-free payout outside the estate); (3) Lifetime gifts to each other as PETs (7-year clock starts on each gift); (4) Owning the property as tenants in common with a life interest trust in the will (preserves RNRB on second death); (5) Nil rate band discretionary will trusts on first death; (6) Marriage or civil partnership — the simplest and most comprehensive solution, creating the unlimited spousal exemption and TRNRB.
Does the Residence Nil Rate Band apply to cohabiting couples?
Not directly on first death. The RNRB (up to £175,000 per person) applies where the main home is 'closely inherited' by direct descendants — biological or adopted children or grandchildren. It does not apply where the home passes to a cohabiting partner (who is not a direct descendant). If the couple's will ensures the home ultimately passes to their children (perhaps via a life interest trust for the surviving partner), the RNRB may be available on the second death.
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