Can I transfer my Inheritance Tax nil rate band to my spouse?

Full answer

When one spouse or civil partner dies and leaves some or all of their estate to the survivor, transfers between spouses are exempt from Inheritance Tax regardless of value, so the nil rate band used on the first death is often left completely unused. Any percentage of the £325,000 standard nil rate band that was not used on the first death can be transferred to the surviving spouse's estate, increasing their own nil rate band by that same percentage, up to a maximum of doubling it to £650,000. The same principle applies to the £175,000 residence nil rate band, which can also be transferred if unused, potentially doubling to £350,000 for the survivor if they also own a qualifying home left to direct descendants. Combined, this means a married couple or civil partnership can potentially shelter up to £1,000,000 (£650,000 standard plus £350,000 residence) from Inheritance Tax on the second death, provided both nil rate bands were fully unused on the first death and the qualifying conditions are met on the second. The transfer is not automatic -- the executors of the second estate must claim the unused percentage from the first death using the appropriate HMRC form when submitting the Inheritance Tax return, and this requires details of the first death's estate even if it was many years earlier and no Inheritance Tax was due at the time.

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