IHT Planning for the Surviving Spouse UK: What to Do After Bereavement to Reduce Inheritance Tax (2026)
The death of a spouse changes the IHT position in every dimension: the estate grows, the existing will no longer fits, and the transferred NRB/RNRB from the first estate must be preserved carefully. The 2-year window for a deed of variation is the most powerful first tool. The will must be updated immediately. And an LPA should be registered now while capacity exists.
| Action | Timing | IHT Effect |
|---|---|---|
| Deed of variation — redirect inheritance to children/charity | Within 2yr of first death | Inheritance removed from your estate; no 7yr clock; charity may trigger 36% rate |
| Update the will | Weeks | RNRB preserved (home to children); transferred NRB used efficiently |
| Update pension nominations | Weeks | Pension fund directed to most efficient beneficiaries (outside estate until 2027) |
| Register LPA | Months (register now while capacity exists) | Attorneys can continue IHT gifting programme if you lose capacity |
| Annual exemption (£3,000/yr) | Each tax year | Immediate IHT exemption; no 7yr clock; carry forward previous year in year 1 |
| Normal expenditure from income (s21 IHTA) | Ongoing from inherited income | Uncapped, immediate, no 7yr clock — from surplus income only |
| AIM BPR portfolio (inherited cash) | Now (qualifying after 2yr) | 100% BPR after 2yr; up to £1m at full rate from April 2026 |
| PETs to children (any amount) | Now | Exempt after 7yr; taper from yr 3 |
IHT Planning for the Surviving Spouse: Complete Guide
How the death of a spouse changes the IHT position
When a spouse or civil partner dies, the surviving spouse inherits assets under the will (or intestacy) subject to the spousal exemption (s18 IHTA 1984) — meaning assets passing from one spouse to the other are IHT-exempt on the first death. But several important IHT consequences arise for the surviving spouse: (1) The surviving spouse's estate grows — they inherit whatever assets the deceased left to them (plus any assets already in their name); (2) The surviving spouse inherits the unused NRB and RNRB from the first estate, which can be claimed on the second death (transferred NRB — s8A; transferred RNRB — s8G); (3) The surviving spouse's estate may now exceed the £2,000,000 RNRB taper threshold for the first time (especially if a large property or investment portfolio was inherited); (4) Property that was jointly owned may now be solely owned by the surviving spouse; (5) The surviving spouse's will — which was written when the estate was a couple's estate — may now be poorly structured for a sole estate. The combination of a larger estate (inherited assets) and a potentially sub-optimal will makes IHT planning for the surviving spouse both urgent and high-value.
Claiming the transferred NRB and RNRB on the first death
The transferred NRB (s8A IHTA 1984) allows the surviving spouse to use the unused proportion of the deceased spouse's NRB on their own death. If the deceased spouse left their entire estate to the surviving spouse (using the spousal exemption), 100% of the deceased's NRB was unused — and 100% of the surviving spouse's NRB is added on their own death (up to 100% transferred NRB). The same principle applies to the RNRB under s8G IHTA 1984. Key rules: (1) The NRB and RNRB do not need to be claimed at the time of the first death — they can be claimed on the second death, however long later; (2) Where the first death was before April 2017, the RNRB may still be transferred to the survivor even though it didn't exist at the time of first death — 100% of the survivor's RNRB can be added (because 100% was unused on the first death); (3) Multiple transferred NRBs: where a surviving spouse had a previous marriage (and the previous spouse died without using their NRB), up to 100% additional transferred NRB can be stacked — giving a maximum NRB on second death of up to £975,000 (3 × £325,000) in exceptional cases; (4) Form IHT402 is used to claim the transferred NRB; form IHT435 for the RNRB claim. Both are submitted with the IHT400 main estate return.
Updating the will after bereavement: the most urgent action
The surviving spouse's existing will was almost certainly written for a different estate position — when the estate was a couple's estate. Now the estate is a sole estate, the will may: (1) Leave the entire estate to 'my spouse or civil partner' — who is now deceased. The substitute clause (if any) may be inadequate or may distribute the estate in a way the survivor no longer intends; (2) Not maximise the RNRB on the second death — if the home is left to a standard discretionary trust, the RNRB is lost; (3) Not reflect the larger estate (inherited assets may need different distribution); (4) Not include a charitable legacy for the 36% reduced rate, which may now be more relevant given the larger estate; (5) Not optimise the transferred NRB — a well-drafted will should use the transferred NRB efficiently. The surviving spouse should review and update the will within weeks of bereavement — not months. The will should: leave the main home outright (or via an IPDI) to direct descendants; use the transferred NRB efficiently; consider a charitable legacy; include substitute beneficiaries. Also update pension nominations — these are not governed by the will and must be changed separately with each pension provider.
The RNRB taper: has the estate grown above £2 million?
Before bereavement, the couple's estate may have been well below £2m. After inheriting the deceased spouse's estate, the surviving spouse's estate may now be above £2m — triggering the RNRB taper for the first time. The taper reduces the RNRB by £1 for every £2 the estate exceeds £2,000,000. At £2,350,000 (where only one RNRB is claimed — the survivor's own + transferred RNRB = £350,000, full loss at £2,700,000), the RNRB is completely lost. If the surviving spouse's estate is now above £2m: (1) Review whether lifetime gifting (PETs to children) could reduce the estate below £2m; (2) Consider AIM BPR shares — 100% exempt after 2 years; (3) A charitable legacy in the will of 10%+ of the estate could reduce the net estate below £2m AND trigger the 36% reduced IHT rate; (4) Every £2 reduced below £2m saves £1.20 in IHT (60% effective marginal rate in the taper band). The surviving spouse's first step should be to calculate the estate value — including all inherited assets — and compare it with the £2m taper threshold.
Deed of variation: the 2-year window from the first death
Within two years of the deceased spouse's date of death, the surviving spouse (as the beneficiary) can execute a deed of variation (s142 IHTA 1984) to redirect part of their inheritance. This allows the surviving spouse to: (1) Redirect some of the inheritance to children or grandchildren — treated as if made directly by the deceased; the 7-year clock does not run for the surviving spouse; (2) Redirect to charity — qualifying the deceased's estate for the 36% reduced IHT rate (if the redirected amount is 10%+ of the net estate); (3) Remove assets from the surviving spouse's estate before they have a chance to grow further. The deed of variation can also be used to restructure the allocation of assets between beneficiaries — for example, if the will left everything to the surviving spouse but it would be more efficient to redirect some assets to children directly. Once the two-year window passes, this option is no longer available. Given the urgency, legal advice on deed of variation should be taken within the first year of bereavement.
Annual gifting, normal expenditure from income, and AIM shares
With the estate now potentially significantly larger, systematic gifting becomes important. The surviving spouse should implement: (1) Annual exemption (s19 IHTA 1984): £3,000 per tax year — immediately IHT-exempt, no 7-year clock. Use the current year and carry forward the previous year (£6,000 in year 1); (2) Normal expenditure from income (s21 IHTA 1984): if the deceased's pension or investment income has now passed to the surviving spouse (potentially significantly increasing their income), the surplus above living expenses can be given away as normal expenditure from income — uncapped, immediately IHT-exempt; (3) AIM BPR portfolio: for significant inherited cash or investment proceeds, investing in qualifying AIM shares starts the 2-year BPR clock. After 2 years, the AIM shares are 100% BPR-exempt (up to £1m combined cap from April 2026); (4) PETs to children: larger gifts to children start the 7-year clock. The sooner these are made, the sooner the clock runs. For a surviving spouse in their 60s or 70s, the 7-year clock may be achievable; (5) Pension contributions: if the surviving spouse is still working, pension contributions before April 2027 grow outside the IHT estate.
LPA: the prerequisite for all ongoing IHT planning
If the surviving spouse does not already have a registered Lasting Power of Attorney (LPA — Property and Financial Affairs), registering one now is the most urgent admin priority. Without an LPA, if the surviving spouse loses mental capacity in the future: attorneys cannot make gifts on their behalf (annual exemption, PETs, or normal expenditure from income); attorneys cannot invest in AIM shares for IHT planning purposes; the Court of Protection would need to be involved to authorise any significant estate management — expensive and slow. An existing LPA from the deceased spouse is irrelevant — the surviving spouse needs their own LPA naming their own attorneys (typically adult children). With a registered LPA, the attorneys can continue the IHT planning programme even if the surviving spouse later loses capacity — making PETs, managing AIM shares, implementing the annual exemption, and more. Register the LPA as soon as possible — the registration process takes several months and a capacity window must be used (an LPA cannot be registered after capacity is lost).
Frequently Asked Questions
What IHT planning should I do after my spouse dies?
Immediate actions: (1) Calculate the estate — including all inherited assets — and compare with the £2m RNRB taper threshold; (2) Update your will within weeks — the existing will was written for a couple's estate; (3) Update pension nominations with each pension provider; (4) Within 2 years of death: consider a deed of variation to redirect some of your inheritance to children or charity (s142 IHTA 1984); (5) Register an LPA if you don't already have one; (6) Implement annual gifting (£3,000/yr) and normal expenditure from income (s21); (7) Consider AIM BPR shares for inherited cash (100% IHT-exempt after 2yr); (8) Make PETs to children — start the 7-year clock.
What is the transferred NRB and how do I claim it after my spouse dies?
The transferred NRB (s8A IHTA 1984) allows the surviving spouse to use the deceased's unused NRB (£325,000) on their own death. If the deceased's entire estate passed to the surviving spouse (spousal exemption — no IHT used on first death), 100% of the deceased's NRB is available to the survivor — effectively doubling the NRB to £650,000. The transferred RNRB (s8G) works similarly for the RNRB (£175,000 each, totalling up to £350,000). Combined: the survivor's estate can pass up to £1,000,000 to children without IHT. Claim: form IHT402 (NRB) and IHT435 (RNRB), submitted with the IHT400 on the second death. These can be claimed at any time — there is no deadline to notify HMRC of the transferred NRB.
Do I need to update my will after my husband or wife dies?
Yes — immediately. The existing will was written for a couple's estate structure; it may: leave the estate to 'my spouse' (who is now deceased) without adequate substitution; fail to maximise the RNRB (if the home goes into a discretionary trust); not reflect your larger, changed estate; lack a charitable legacy. Update the will to: direct the main home outright to children or via an IPDI trust; include the 36% charitable legacy if appropriate; ensure all pension nominations are updated separately; name new executors if you shared executors with your late spouse.
Can I redirect my inheritance from my late spouse to my children to save IHT?
Yes — via a deed of variation (s142 IHTA 1984), within two years of your spouse's date of death. You can redirect all or part of your inheritance to children or grandchildren — it is treated as if your spouse made the gift directly to them. This can: reduce your own estate (the gift never enters your estate); potentially qualify the deceased's estate for the 36% reduced IHT rate if a charity receives 10%+ of the net estate; avoid the 7-year PET clock (it's treated as a direct gift from the deceased, not from you). The two-year deadline is strict — take legal advice as soon as possible.
Has my estate grown above £2 million after inheriting from my spouse?
It may have. If your own estate was, say, £800,000 and you inherited £1,300,000 from your late spouse, your estate is now £2,100,000 — above the £2m RNRB taper threshold. This means the RNRB (worth up to £70,000 in IHT savings) starts to taper. Priority actions: calculate the estate; consider lifetime gifts (PETs to children) or AIM BPR shares to reduce the estate below £2m; a charitable legacy of 10%+ in your will may also reduce the net estate below £2m while triggering the 36% reduced rate.
Update Your Will After Bereavement
After losing a spouse, updating your will is the most important single action you can take. Your estate has changed; your will should reflect the new reality. WillSafe will kits for England and Wales let you update your will quickly and at a fraction of solicitor cost.
View Will Kits from £39.99