The often quoted £1,000,000 inheritance tax threshold for married couples is real, but it is not a single allowance. It is four separate allowances stacked together: two nil-rate bands of £325,000 (one each) and two residence nil-rate bands of £175,000 (one each). A married couple or civil partners only reach the full £1,000,000 if all four apply, which requires a home worth at least £350,000 passing to children or other direct descendants, and a second estate worth no more than £2,000,000. Miss a condition and the figure quietly shrinks.
This guide explains how each layer works in England and Wales, how a widow or widower actually claims a late partner's unused allowances (they are not automatic), and the two traps that catch couples out: the £2 million taper and the assumption that cohabiting partners get the same treatment. They do not. If you want to see your own numbers rather than the theory, our free inheritance tax threshold calculator works out your household's combined allowances, and any taper reduction, in about two minutes.
The four building blocks of the £1,000,000
Every individual estate starts with the standard nil-rate band of £325,000, frozen until 5 April 2031. Tax at 40% (or 36% where 10% or more of the net estate goes to charity) only applies above the available threshold. On top of that sits the residence nil-rate band (RNRB) of £175,000, an extra allowance introduced in April 2017 that applies only where a home passes to direct descendants, as set out in HMRC's residence nil-rate band guidance.
| Allowance | Amount | Key condition |
|---|---|---|
| Nil-rate band (each spouse) | £325,000 | Applies to any assets, no property needed |
| Residence nil-rate band (each spouse) | £175,000 | Home (or downsizing proceeds) must pass to direct descendants; tapered above £2m |
| Combined maximum | £1,000,000 | All four conditions met on the second death |
For how the threshold works for a single person, including the charity rate and gifts, see our companion guide to the UK inheritance tax threshold. This article stays on the married couple's question: how the allowances combine, transfer and taper.
Why the first death usually costs nothing and uses nothing
Anything left to a spouse or civil partner is completely exempt from inheritance tax, with no upper limit (for UK domiciled couples). This is the spouse exemption, and it does two jobs at once.
First, it means the typical first death, where everything passes to the survivor, produces no inheritance tax bill at all, however large the estate. Second, and this is the part people miss, because the estate was covered by the exemption rather than by the nil-rate band, the deceased's allowances are not used up. The whole £325,000 nil-rate band and the whole £175,000 RNRB sit unused, and the unused percentage can later be transferred to the survivor's estate.
That is the machinery behind the £1,000,000: exemption on the first death preserves the first set of allowances, transfer rules deliver them to the second death, where they stack on the survivor's own set. Note that whether any inheritance tax is due is a separate question from whether probate is needed; when a spouse dies, the estate may still need a grant, which we cover in do you need probate when a spouse dies.
Claiming the transferred allowances: the forms that matter
The transfer is not automatic. After the second death, the survivor's personal representatives must claim it, normally within 2 years of the end of the month in which the survivor died. Three forms do the work:
- Form IHT402 claims the unused percentage of the first spouse's nil-rate band. It asks for details of the first death, the will or intestacy position, and how much of the band was used.
- Form IHT435 claims the residence nil-rate band on the survivor's own estate.
- Form IHT436 claims the transferred residence nil-rate band from the first spouse.
Paperwork from the first death makes these claims far easier: the grant of probate, the will, and a note of any gifts or legacies that used part of the band. Executors of a surviving spouse who cannot find these documents can still claim, but expect more correspondence with HMRC. Our hub for surviving spouses collects the practical steps in one place.
Widows, widowers and the awkward cases
First spouse died before October 2007
The transferable nil-rate band applies wherever the survivor dies on or after 9 October 2007. The first death can be decades earlier. What transfers is the unused percentage, applied to the band in force at the second death. A husband who died in 1995 leaving everything to his wife used 0% of his band, so her estate today claims a 100% uplift: an extra £325,000 at current values, not the 1995 figure.
First spouse died before April 2017 (before the RNRB existed)
The RNRB can still be transferred. Where the first death was before 6 April 2017, the first estate is simply treated as having a fully unused residence nil-rate band, so the survivor's estate can claim a 100% RNRB uplift, subject to the taper if the first estate exceeded £2 million.
Remarriage: the two-band cap
A widow who remarries does not lose the allowances transferable from her first marriage. But the legislation caps the total uplift at one additional full band, however many spouses someone survives. A woman widowed twice cannot stack three nil-rate bands: the maximum remains £650,000 plus £350,000 of RNRB. Where each late spouse left part of their band unused, the executors can choose which claims to combine up to the cap.
The direct-descendant condition: who counts as children
The residence nil-rate band, both the survivor's own and the transferred one, only applies where a qualifying residential interest passes to direct descendants. That means children, grandchildren and remoter descendants, and the definition is wider than many families expect: it includes stepchildren, adopted children and foster children, plus the spouses and civil partners of any of them. It does not include nieces, nephews, siblings or unrelated beneficiaries.
So a couple leaving their £400,000 home to their two children gets the full £350,000 combined RNRB. The same couple leaving the home to a much loved niece gets none of it, and their threshold drops from £1,000,000 to £650,000. The RNRB is also capped at the value of the home itself: a £250,000 house passing to children supports only £250,000 of RNRB, not £350,000.
Families who sold a larger home later in life are not shut out. The downsizing addition preserves RNRB that would otherwise be lost where someone downsized or sold their home on or after 8 July 2015, provided assets of equivalent value pass to direct descendants. The calculation is fiddly and claimed through the same IHT435 route, so flag it to whoever handles the estate rather than assuming the allowance is gone.
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The £2 million taper: how large estates lose the RNRB
Here is the trap for wealthier couples. If the estate on death exceeds £2,000,000, the residence nil-rate band is reduced by £1 for every £2 above that line. For a single person with one RNRB, the allowance is fully lost at £2.35 million. For a surviving spouse claiming two RNRBs (£350,000 combined), the allowance is fully extinguished once the estate reaches £2.7 million.
The taper is measured against the estate before reliefs and exemptions, so business or agricultural property can push an estate over the line even where those assets themselves end up relieved. And because everything is stacked into the survivor's estate, the couple structure that saves tax below £2 million can worsen the taper above it. From 6 April 2027, unused pension funds and death benefits will also enter estates for inheritance tax under the pension changes legislated for 2027, which will push more second estates towards and past the taper line. You can estimate that effect with our pensions IHT 2027 estimator.
Worked example: a widow's estate at the second death
Margaret's husband died in 2012 leaving everything to her. She dies in 2026 leaving her whole estate, including the family home worth £425,000, to her two children. Her estate totals £1,150,000.
| Step | Amount |
|---|---|
| Margaret's estate | £1,150,000 |
| Her own nil-rate band | £325,000 |
| Transferred nil-rate band (IHT402, 100% unused) | £325,000 |
| Her residence nil-rate band (IHT435, home to children) | £175,000 |
| Transferred residence nil-rate band (IHT436) | £175,000 |
| Total threshold | £1,000,000 |
| Taxable estate | £150,000 |
| Inheritance tax at 40% | £60,000 |
Without the claims, her estate would have had only her own £500,000 of allowances and the bill would have been £260,000. The forms are worth £200,000 in this example. That is the single most important practical point in this whole area: the executors must claim.
Cohabiting couples: none of this applies
Every mechanism in this article, the unlimited spouse exemption, form IHT402, the transferred RNRB, is reserved for legal spouses and civil partners. A cohabiting couple, however long they have lived together, gets none of it. On the first death, assets passing to the surviving partner are taxable above the deceased's single £325,000 band, and the RNRB cannot help because a partner is not a direct descendant. On the second death there is nothing to transfer. The same assets can effectively be taxed twice on their way to the children.
For unmarried couples with a home and savings, this is one of the strongest reasons to plan deliberately: marriage or civil partnership changes the tax position overnight, and a properly drafted will controls where assets go, since intestacy gives a cohabiting partner nothing at all. Our wills guide covers the options.
A note on Scotland
Inheritance tax itself is UK-wide, so the bands, the transfer rules and the taper described here apply in Scotland too. What differs is the surrounding law: succession rules, legal rights for spouses and children, and confirmation rather than probate. If the estate is in Scotland, start with our guide to the inheritance tax threshold in Scotland.
Check your own position, then get help if you need it
Most couples' estates fall comfortably inside the combined allowances, and knowing that brings real peace of mind. The inheritance tax threshold calculator will show your household's combined bands, whether the direct-descendant condition is met, and any taper reduction, using the current frozen figures.
If your combined estate is approaching £2 million, you are unmarried with significant assets, or a previous marriage complicates the transfer position, it is worth speaking to a specialist. This article is general information, not legal or tax advice for your situation. We can connect you with a vetted estate planning specialist who handles these claims routinely, with no pressure and no obligation.