IHT Spousal Exemption UK: The Unlimited Spouse and Civil Partner Exemption Explained (2026)
Gifts between spouses and civil partners are fully exempt from IHT with no upper limit — during lifetime and on death. Section 18 IHTA 1984. Non-dom cap: £325,000 where recipient is not UK-domiciled. No 7-year clock.
How the Spousal IHT Exemption Works
The spousal exemption: what section 18 IHTA 1984 provides
Section 18 IHTA 1984 provides that a transfer of value between spouses or civil partners is an exempt transfer — there is no IHT on it. The exemption is unlimited in amount: there is no cap on how much can pass between spouses or civil partners free of IHT. The exemption applies both during lifetime (gifts between spouses while both are alive) and on death (assets passing to a surviving spouse under the will or by intestacy). There is no 7-year clock for the spousal exemption: unlike PETs (potentially exempt transfers to other individuals), gifts between spouses do not require the donor to survive any period for the gift to be exempt — they are exempt immediately and unconditionally. The exemption applies equally to civil partners under the Civil Partnership Act 2004, which gave civil partners equivalent inheritance tax treatment to married spouses.
The non-domicile cap: where the exemption is restricted
Section 18(2) IHTA 1984 restricts the spousal exemption where the recipient spouse or civil partner is not UK-domiciled (a 'non-dom'). In this case, the spousal exemption is capped at £325,000 (equal to the nil rate band). Gifts and transfers above £325,000 to a non-dom spouse are chargeable to IHT in the usual way. The restriction exists because a non-dom's worldwide estate is not subject to UK IHT (only UK-situs assets are taxed). Without the cap, a UK-domiciled individual could transfer an unlimited amount to a non-dom spouse, removing all assets from UK IHT permanently. The non-dom spouse can elect UK domicile for IHT under s267ZA IHTA 1984 — this unlocks the unlimited spousal exemption but also brings the non-dom's worldwide assets within UK IHT. The election is irrevocable while the spouse remains UK-resident. From April 2025, the long-term UK resident test (10+ consecutive years) also affects the position of non-dom spouses.
The spousal exemption on death: how it interacts with the will
When a spouse dies leaving everything to the surviving spouse, the entire estate passes free of IHT under the spousal exemption. This defers IHT to the second death. On the second death (the surviving spouse's estate), IHT is charged on the combined value of: (1) the assets inherited from the first spouse (now part of the survivor's estate); plus (2) the survivor's own assets. The NRB on second death can be doubled (via the transferable NRB under s8A IHTA 1984) — the deceased's unused NRB is added to the survivor's. If both spouses had an unused NRB (e.g. the first spouse left everything to the survivor, using no NRB), the survivor has a £650,000 NRB at their death. Similarly, both RNRB allowances are available if the home passes to direct descendants on the second death. Leaving everything to the surviving spouse is therefore a complete IHT deferral — not a complete IHT saving. The IHT is paid on the second death, on the combined estate.
First-death planning: why leaving everything to the spouse is not always optimal
Leaving everything to the surviving spouse uses the spousal exemption fully — but may not be the most IHT-efficient arrangement for the combined estate. The NRB discretionary will trust on first death (legacy of £325,000 to a trust rather than direct to spouse) pre-2007 was the standard planning tool — it preserved the first NRB for use on first death, rather than transferring it to the second estate. Post-2007, the transferable NRB (TNRB) means the first NRB is generally preserved anyway. However, for large estates or blended family situations, first-death NRB trust planning can still be valuable — it keeps the NRB amount out of the survivor's estate (protecting against care fee means-testing, second marriage, or the survivor's estate growing) rather than merely carrying forward the entitlement. The RNRB can only be used where the home passes to direct descendants. If the first spouse leaves the home to the surviving spouse (not to children directly), the first RNRB is not used — but it is transferable. The transferred RNRB is then available on the second death (IHTA 1984 s8G).
Lifetime gifts between spouses: the IHT and CGT position
During lifetime, gifts between spouses and civil partners are: (1) IHT-exempt under s18 IHTA 1984 — no IHT, no 7-year clock, no chargeable transfer; and (2) CGT-exempt under s58 TCGA 1992 — transfers are treated as made at no gain/no loss (the recipient takes the donor's original base cost). The combination of both exemptions makes spousal transfers a powerful tool for pre-death planning: an asset with a large embedded gain can be transferred to the lower-CGT-rate spouse before sale, using their annual CGT exemption or lower rate. For IHT, transfers between spouses equalise their estates, ensuring both NRBs and RNRBs are fully utilised on each death. A couple where all assets are in one name will waste the other's NRB (unless the NRB is transferred via TNRB or a will trust is used). Estate equalisation via lifetime gifts is a fundamental IHT strategy for couples with disparate estates.
Unmarried couples: no spousal exemption
The spousal exemption applies only to legally married spouses and registered civil partners. Cohabiting (unmarried) partners have no equivalent exemption — they are strangers for IHT purposes regardless of the length of the relationship. A cohabiting partner who inherits their partner's estate pays 40% IHT above the £325,000 NRB. There is no transferable NRB between cohabiting partners. The practical planning tools for cohabiting couples (life insurance in trust, mutual wills, lifetime PETs) are significantly less efficient than the spousal exemption. Marriage or civil partnership is the simplest and most comprehensive way to access the spousal exemption.
Frequently Asked Questions
Is there a limit on how much can pass between spouses free of IHT?
No — the spousal exemption under s18 IHTA 1984 is unlimited where both spouses are UK-domiciled. There is no cap on the amount that can pass between UK-domiciled spouses or civil partners free of IHT, either during lifetime or on death. The only restriction is the £325,000 cap where the recipient spouse is non-UK-domiciled (s18(2) IHTA 1984).
Does the spousal IHT exemption apply to civil partners?
Yes. Civil partners registered under the Civil Partnership Act 2004 have exactly the same IHT treatment as married spouses. The spousal exemption under s18 IHTA 1984 applies to civil partners. The transferable nil rate band and transferable RNRB also apply equally to civil partners.
Is there a 7-year rule for gifts between spouses?
No. Gifts between spouses and civil partners are immediately exempt under s18 IHTA 1984 — there is no 7-year clock. Unlike PETs (gifts to other individuals), spousal gifts are not potentially exempt transfers — they are unconditionally exempt. They do not form part of the 7-year cumulation period for calculating IHT on death.
What is the non-dom spousal exemption cap?
Where the recipient spouse is non-UK-domiciled, the spousal exemption is capped at £325,000 (s18(2) IHTA 1984). Transfers above £325,000 to a non-dom spouse are subject to IHT. The non-dom spouse can elect UK domicile under s267ZA IHTA 1984 to unlock the full unlimited spousal exemption — but this brings their worldwide assets within UK IHT. The election is irrevocable while UK-resident.
If I leave everything to my spouse, does that save IHT permanently?
Not permanently — it defers IHT to the second death. When everything passes to the surviving spouse on first death, the IHT is deferred but the estate (including what was inherited) becomes taxable at the second death. The NRB is doubled via the transferable NRB (s8A IHTA 1984) — so a couple has a combined NRB of £650,000 (plus up to £350,000 RNRB if the home passes to direct descendants). For very large estates, leaving everything to the spouse concentrates the wealth for a larger IHT charge on second death.
Use the Spousal Exemption Correctly in Your Will
Mirror wills, life interest trusts, and NRB planning all affect how the spousal exemption interacts with your IHT position. WillSafe will kits for England and Wales include guidance on directing assets between spouses, appointing executors, and structuring the estate for both deaths.
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