Inheritance Tax Between Spouses and Civil Partners UK 2026: Spousal Exemption, tNRB, Pitfalls of Passing Everything to a Spouse, and When IHT Still Applies
Transfers between UK domiciled spouses and civil partners are fully exempt from IHT — but passing everything to your spouse on first death can increase the second death IHT bill. The tNRB saves £130k but is NOT automatic. And cohabitees get no exemption at all.
tNRB and tRNRB Are NOT Automatic — File IHT402 and IHT435
The transferred NRB (up to £325k — saving £130k IHT) and transferred RNRB (up to £175k — saving £70k IHT) must be actively claimed by the executor of the second spouse's estate on separate forms (IHT402 and IHT435). Neither is automatic. Executors who fail to file lose up to £200k in IHT savings — permanently.
| Scenario | Exemption | Conditions | IHT Effect | Planning Note |
|---|---|---|---|---|
| Gift to spouse during lifetime — UK dom both | UNLIMITED — s18 IHTA. No cap; no 7yr clock; no IHT; no annual limit. Applies whether the gift is cash, property, shares, or any other asset. | Both must be legally married or civil partners at the date of the gift. Cohabitees: NO exemption. Gift to an unmarried partner is a PET with 7yr clock. | £0 IHT immediately. No PET — the gift is NOT chargeable and does NOT start a 7yr clock. The asset is now in the recipient spouse's estate for IHT on their subsequent death. | Useful for equalising estates (moving assets from the higher-taxed spouse to the lower-taxed one). But: if both spouses have large estates, simply moving assets between them delays IHT rather than reducing it. Better planning: make PETs from BOTH spouses to reduce both estates simultaneously; or use the NRB DT structure on first death. |
| Legacy to spouse in will — UK dom both | UNLIMITED — s18 IHTA. The entire bequest from one spouse's estate to the surviving spouse is IHT-exempt regardless of amount. | Legally married/CP at date of death. Will must clearly identify the spouse as beneficiary. If the spouse predeceases: the exemption does not apply (the gift lapses or falls into residue — review of wills is essential). | £0 IHT on first death (on the spouse's share). But: the surviving spouse's estate on the SECOND DEATH includes all inherited assets plus their own — potentially much larger IHT liability. tNRB is available at second death (IHT402 — NOT automatic) only if the first spouse's NRB was unused. | The 'everything to spouse' strategy is simple but IHT-inefficient for large estates. Consider instead: leaving up to NRB (£325k) to an NRB Discretionary Trust on first death + remainder to spouse. This uses the first NRB (saving £130k at second death) while still providing for the surviving spouse from the DT. |
| Legacy to spouse — TRANSFEREE is non-domiciled (non-dom) | CAPPED at £325,000 (same as NRB). Above £325k: IHT at 40% on the excess. This cap applies even if the donor spouse is UK dom. | The RECIPIENT spouse (transferee) is non-domiciled for IHT purposes. Domicile at date of the gift/bequest. Non-dom status is assessed under the IHTA 1984 domicile rules (NOT the general law — s267 IHTA: deemed dom after 15 of last 20 UK tax years; or after 6 April 2025: LTUK test — 10 of last 20 tax years, Finance Act 2025). | Transfer to non-dom spouse: first £325k exempt; excess over £325k chargeable at 40%. Example: estate £1.5m all to non-dom spouse: £1.5m − £325k = £1.175m × 40% = £470,000 IHT. Compared to UK dom spouse: £0 IHT. | REMEDY: s267ZA IHTA 1984 — non-dom spouse can elect to be treated as UK dom for IHT. Election: irrevocable; once made, the non-dom spouse's own worldwide assets are subject to UK IHT on their death. The election is most beneficial when the transferred estate is very large (so the s267ZA election saves much more in IHT than it exposes the non-dom's own assets to). Specialist international tax advice required. |
| tNRB — Transferred Nil Rate Band (s8A IHTA) | Up to £325,000 additional NRB transferred from the first spouse's unused NRB. If first spouse's NRB was entirely unused (estate all to surviving spouse): full £325k tNRB. If partially used: proportion transferred. | CLAIM REQUIRED — IHT402 (NOT automatic). Must be filed by the executor of the SECOND spouse's estate. No time limit for IHT402 but must be within 2yr of second death for late claims. Evidence of first spouse's NRB usage required (first spouse's estate documents, IHT forms). | Surviving spouse's effective NRB: £325k own NRB + £325k tNRB = £650k (if full tNRB). Saves up to £130k IHT at second death (£325k × 40%). The tNRB is expressed as a PERCENTAGE: if first spouse used £100k of their NRB (e.g., NRB DT of £100k), remaining percentage = (£225k ÷ £325k) = 69.2%. tNRB at second death = 69.2% × current NRB (£325k) = £224.6k. | CRITICAL: the tNRB is NOT automatic. Executors of the second estate who fail to file IHT402 LOSE the tNRB permanently. There have been cases where executors failed to claim and HMRC refused late claims. The tNRB benefit is up to £130k — a significant amount to lose through an administrative failure. Every executor administering a widowed person's estate should check whether the first spouse's NRB was unused and file IHT402 as a matter of course. |
| tRNRB — Transferred Residence Nil Rate Band (s8G IHTA) | Up to £175,000 additional RNRB transferred from the first spouse's unused RNRB. If first spouse's estate had no qualifying residential property to direct descendants on first death (e.g., property passed to spouse — RNRB unused): full £175k tRNRB available at second death. | CLAIM REQUIRED — IHT435 (NOT automatic; separate from IHT402). Must be filed by the executor of the second spouse's estate. IHT435 requires details of the first spouse's estate and RNRB usage. RNRB taper applies: on the SECOND spouse's estate. Even with full tRNRB + RNRB = £350k, the taper still starts at £2m on the second spouse's estate. | Surviving spouse's effective threshold: NRB £325k + tNRB £325k + RNRB £175k + tRNRB £175k = £1,000,000 (if all fully available). This is the famous '£1m threshold' for married couples. RNRB + tRNRB taper to zero at £2.7m (s8E IHTA). Saves up to £70k IHT (£175k tRNRB × 40% = £70k). | IHT435 is a separate form from IHT402. Both must be filed. Neither is automatically granted. Both are commonly missed by executors. The total benefit of filing both: up to £200k IHT saved (£130k from tNRB + £70k from tRNRB). Filing IHT402 and IHT435 is one of the highest-value administrative tasks for an executor administering a widowed person's estate. |
| Civil partners — same treatment as married spouses | Civil partnerships (formed under the Civil Partnership Act 2004 or overseas): IDENTICAL to married spouse treatment for all IHT purposes. s18 IHTA: unlimited spousal/CP exemption. tNRB, tRNRB: all transferable as for spouses. | Must be a legally registered civil partnership at the time of the gift/death. Overseas civil partnerships: recognised if equivalent to a UK civil partnership. Cohabiting LGBTQ+ couples: NO exemption (same as heterosexual cohabiting couples) unless forming a civil partnership or marrying. | Identical to married couple scenarios above. All s18 IHTA exemptions and tNRB/tRNRB transfers apply equally. | For LGBTQ+ cohabiting couples: forming a civil partnership or marriage provides access to: s18 IHTA unlimited exemption; tNRB/tRNRB transfer; spousal RNRB chain; and all other spousal IHT planning tools. The IHT benefit of marriage/CP formation is substantial for couples with large combined estates. |
IHT spouses and civil partners UK 2026. s18 IHTA 1984: spousal/CP exemption — unlimited for UK domiciled spouse/CP (both married or in CP at date of gift/death). Non-dom transferee cap: £325k exemption only; above cap: 40% IHT. s267ZA IHTA 1984: non-dom spouse election to be treated as UK dom for IHT; irrevocable; election applies to non-dom's own worldwide assets on their death. LTUK test (Finance Act 2025): deemed UK dom after 10 of last 20 UK tax years (from 6 April 2025; previous 15-of-20 test: transitional provisions). s267 IHTA: deemed domicile rules. Cohabitees: NO s18 exemption; gift is PET (7yr clock — s3A IHTA) or CLT; on death: cohabitee has no IHT exemption; Inheritance (PFD) Act 1975 claim available but uncertain. tNRB (s8A IHTA 1984): transferred NRB; IHT402 claim by executor of second estate (NOT automatic); unused NRB from first spouse transferred as a percentage of the NRB at first death × current NRB; capped at 100% of current NRB across all prior deceased spouses; max saving £130k. tRNRB (s8G IHTA 1984): transferred RNRB; IHT435 claim (separate from IHT402; NOT automatic); unused RNRB from first spouse transferred; max £175k; max saving £70k. IHT402 and IHT435: filed by executor of SECOND spouse's estate; evidence of FIRST spouse's estate required (first estate IHT return, death certificate, marriage certificate); no specific time limit but promptly with the IHT400. NRB Discretionary Trust (NRB DT): up to £325k on first death into DT; assets outside surviving spouse's estate; surviving spouse can be DT beneficiary (s8H IHTA interaction — QRI and IHT(4) check needed); saves £130k on second death. NRB DT + tNRB interaction: if NRB DT used £100k on first death, tNRB = (£225k ÷ £325k) × £325k = £225k (not full £325k). Deed of Variation (s142 IHTA): within 2yr of first death, DoV can create NRB DT post-death if not in the will. RNRB: s8D-8K IHTA; £175k; to direct descendants (s8K(3)); property passing to surviving spouse on first death loses RNRB for first death but preserves tRNRB for second. Second marriage: tNRB from multiple deceased spouses is aggregated (capped at 100% of current NRB). Civil Partnership Act 2004: CP treated identically to marriage for all IHT. Marriage: legal marriage under Marriage Acts (including same-sex marriage from 29 March 2014 in England and Wales). s211 IHTA: IHT from residue by default. s199 IHTA: executor personal liability. Clearance: s239 IHTA (IHT30). Spousal charity redirect: if surviving spouse redirects their inherited assets to charity via DoV → s36 IHTA 36% rate not triggered by DoV alone unless 10% baseline met.
Spousal Exemption and IHT: The Complete Guide
The 'everything to the spouse' trap — why simplicity costs money on the second death
The most common IHT planning mistake for married couples is leaving everything to the surviving spouse on the first death. The logic seems sound: (1) no IHT on first death (s18 IHTA spousal exemption); (2) the survivor is looked after; (3) simple administration. The problem: on the SECOND DEATH, the combined estate of both spouses is assessed for IHT — with only the NRB, tNRB, RNRB, and tRNRB as thresholds. For larger estates, this creates a much larger IHT bill on the second death than was necessary. The better approach: use the first spouse's NRB (£325k) on first death. Instead of leaving everything to the surviving spouse, leave up to £325k to an NRB Discretionary Trust on the first death. The trust: (a) can provide for the surviving spouse as a beneficiary (so the survivor is still supported); (b) sits outside the surviving spouse's estate for IHT; (c) saves up to £130k IHT on the second death (£325k × 40%). The tNRB mechanism is a partial solution but does not entirely replace the NRB DT. tNRB on the second death: saves £130k on the second estate. NRB DT on the first death: also saves £130k — the same saving, but the DT assets are already outside the surviving spouse's estate, growing free of IHT. Combined: NRB DT on first death (£130k) + tNRB properly calibrated (accounting for the DT usage) provides an additional benefit on the second death. Important: an NRB DT on the first death reduces the tNRB available at the second death proportionally. So the NRB DT is most effective for estates where the NRB DT assets are invested and grow to above the NRB value — the growth is entirely outside the estate.
Non-domicile spouses — when the unlimited exemption does not apply
The s18 IHTA unlimited spousal exemption only applies in full when the RECEIVING spouse is UK domiciled. If the receiving spouse is non-domiciled for IHT purposes: the exemption is capped at £325,000 (the NRB). IHT at 40% applies to the excess. This catches many international families: a UK national with significant assets married to a non-dom spouse — the non-dom spouse's inheritance above £325k is subject to 40% IHT on the first spouse's death. Domicile for IHT: assessed under the IHTA 1984 rules — not UK law generally. A person is UK domiciled for IHT if: (a) they have a UK domicile of origin or choice (general law); OR (b) they are 'deemed domiciled' — from 6 April 2025 (Finance Act 2025 'LTUK test'): resident in the UK for 10 of the last 20 tax years (prior to April 2025: the 'fifteen of the last twenty' test). The s267ZA IHTA election: a non-dom spouse can elect to be treated as UK dom for IHT. This unlocks the unlimited s18 exemption. But the election is IRREVOCABLE — once made, the electing spouse's worldwide assets are subject to UK IHT on their death. The election should only be made when the IHT saving on the first spouse's death significantly outweighs the additional UK IHT exposure on the electing spouse's own estate.
The second marriage problem — how successive marriages affect tNRB
The tNRB (s8A IHTA) allows the unused NRB from a deceased spouse to be transferred to the surviving spouse. But what happens when a person has been married more than once? Multiple marriages: the tNRB allows transfer from MULTIPLE prior spouses — but the total transferred cannot exceed 100% of the current NRB. Example: a person who has been widowed twice: first spouse left 50% of their NRB unused; second spouse left 75% of their NRB unused. Total transferred = 50% + 75% = 125%? No — capped at 100%. So the effective transfer = 100% (the cap), giving a tNRB of £325k (the full NRB). Additional transfers above 100% are lost — they cannot be carried forward to any further estate. The tNRB percentage calculation: each deceased spouse's unused NRB is expressed as a percentage of the NRB at FIRST DEATH. Those percentages are added together (capped at 100%). The surviving spouse's executor then transfers that percentage of the CURRENT NRB. This means: if the NRB has increased since the first death, the transferred amount increases proportionally. (NRB has been frozen at £325k since April 2009 and through to April 2030 — so in practice, the tNRB amount has been the same as the original unused NRB.)
Frequently Asked Questions
Do spouses pay inheritance tax between themselves?
No — transfers between UK domiciled spouses or civil partners are fully exempt from IHT under s18 IHTA 1984. The spousal/civil partner exemption is unlimited: there is no cap on the amount that can pass between UK dom spouses IHT-free, during lifetime or on death. Exception: if the RECEIVING spouse is non-domiciled (non-dom), the exemption is capped at £325,000 (the NRB). Above £325k: IHT at 40% on the excess. Remedy: s267ZA IHTA 1984 — the non-dom spouse can elect to be treated as UK dom for IHT (irrevocable). Cohabitees: NO exemption — gifts to an unmarried partner are PETs (7yr clock) or subject to IHT on death.
What is the transferred nil rate band (tNRB) for spouses?
The transferred nil rate band (tNRB — s8A IHTA 1984) allows the unused NRB from a deceased spouse or civil partner to be transferred to the surviving spouse's estate. If the first spouse left their entire estate to the surviving spouse (s18 IHTA exempt — no NRB used): full £325k tNRB is available at the surviving spouse's death. If the first spouse used some of their NRB (e.g., left £100k to an NRB DT on first death): the tNRB = (£225k ÷ £325k) × current NRB = £225k. CRITICAL: the tNRB is NOT automatic. The executor of the SECOND spouse's estate must file IHT402 with HMRC to claim it. Failure to file = loss of the tNRB — permanently. The saving from claiming the tNRB: up to £130k IHT (£325k × 40%). Always file IHT402 for a widowed person's estate.
Is it always best to leave everything to your spouse in a will?
Not necessarily — for larger estates. Leaving everything to the surviving spouse: (1) avoids IHT on first death (s18 IHTA unlimited exemption); (2) is simple and provides for the survivor. BUT for estates above £650k (NRB + tNRB), the combined estate on the second death may generate a large IHT bill that could have been reduced. Better approach for larger estates: leave up to the NRB (£325k) to an NRB Discretionary Trust on the first death. This: uses the first spouse's NRB; keeps £325k outside the surviving spouse's estate for IHT; can still benefit the surviving spouse as a DT beneficiary; saves £130k IHT on the second death. The surviving spouse remains provided for (as a DT beneficiary) while the NRB is efficiently used. A Deed of Variation (s142 IHTA — within 2yr of first death) can create the NRB DT post-death if it was not in the will.
What happens to IHT when a non-domiciled spouse inherits?
If the RECEIVING spouse is non-domiciled for IHT purposes (assessed under s267 IHTA — not UK general law), the s18 IHTA spousal exemption is capped at £325,000 (the NRB). IHT at 40% applies to the excess above £325k. Example: estate £1.5m all to non-dom spouse: £1.5m − £325k = £1.175m × 40% = £470,000 IHT. Remedy: s267ZA IHTA 1984 election — non-dom spouse elects to be treated as UK dom for IHT. This unlocks the unlimited s18 exemption. But: the election is irrevocable; the electing spouse's own worldwide assets are then subject to UK IHT on their death. The election is most beneficial when the inherited estate is large and the non-dom spouse's own worldwide assets are modest. Finance Act 2025 change: from 6 April 2025, the long-term UK resident (LTUK) test replaces the old 15-of-20-years deemed domicile test: a person is deemed UK domiciled after 10 of the last 20 UK tax years.
Do civil partners get the same IHT exemptions as married couples?
Yes — civil partners (formed under the Civil Partnership Act 2004) have identical IHT treatment to married spouses for all purposes: (1) s18 IHTA unlimited spousal/CP exemption — transfers between UK dom civil partners are fully IHT-exempt during lifetime and on death. (2) tNRB (s8A IHTA): unused NRB from a deceased civil partner is transferred to the surviving partner — claimed on IHT402. (3) tRNRB (s8G IHTA): unused RNRB transferred — claimed on IHT435. (4) All other IHT planning strategies available to married couples (NRB DT, RNRB, spousal charity redirect etc.) are equally available to civil partners. Cohabiting same-sex couples: NO IHT exemption unless a civil partnership or marriage is formed. Forming a civil partnership or marriage for a same-sex couple provides access to the full range of spousal IHT exemptions and planning tools.
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