Who can transfer unused allowances?
Spouses and civil partners who were still married or in a civil partnership when the first of them died. The rules are in sections 8A to 8C of the Inheritance Tax Act 1984 for the nil-rate band and section 8G for the residence nil-rate band.
- Married couples: the first death can have happened at any date, even before inheritance tax existed.
- Civil partners: the first death must be on or after 5 December 2005.
- Divorced or dissolved: no transfer between former partners (HMRC manual IHTM43005).
- Unmarried partners: no transfer at all, however long the relationship. See wills for unmarried couples.
How is the unused amount worked out?
It is the unused percentage that transfers, not a cash amount. Work out how much of the first person’s nil-rate band was used by what they left to people other than their spouse or charity, and by gifts in the seven years before they died. The percentage left is added to the nil-rate band in force when the survivor dies (GOV.UK: transferring unused basic threshold).
GOV.UK’s example: Carole leaves £130,000 to her children and the rest to her husband Simon. That uses 40% of her £325,000 band, leaving 60%. When Simon dies, his threshold is £325,000 plus 60% of £325,000, which is £520,000.
Because it is a percentage, a band from years ago is measured against the threshold at the time. For example, a husband who died in the 2008 to 2009 tax year, when the threshold was £312,000, and left £62,400 to his brother used 20% of it. If his widow dies while the threshold is £325,000, her estate gets 80% of £325,000 extra: £585,000 in total.
The residence nil-rate band works the same way (GOV.UK: transferring unused residence nil-rate band):
- If the first death was before 6 April 2017, 100% is treated as unused, unless the first estate was over £2 million.
- If the first death was later, the unused percentage depends on how much residence band that estate used and on the taper.
- The two bands are separate. Even if all of the nil-rate band was used on the first death, the residence band can still transfer.
What does “up to £1 million” really require?
£1 million is the maximum: £325,000 × 2 plus £175,000 × 2. An estate only reaches it when every one of these conditions is met:
- The first spouse used none of their nil-rate band, for example because everything went to the survivor or to charity and they made no chargeable gifts in the seven years before death.
- The first spouse used none of their residence band and their estate was not over £2 million.
- The survivor leaves a home, or share of one, worth at least £350,000 to direct descendants, or qualifies under the downsizing rules.
- The survivor’s estate is not over £2 million; above that, the £350,000 residence band tapers and is gone at £2.7 million.
- The survivor’s own gifts in the seven years before death have not used up the nil-rate band.
- The executors claim both transfers in time.
| Situation | Nil-rate bands | Residence bands | Total allowance |
|---|---|---|---|
| Both bands unused on the first death; £1 million estate including a £400,000 home left to the children | £650,000 | £350,000 | £1,000,000 |
| As above, but the home is worth £250,000 | £650,000 | £250,000 (capped at the home’s value) | £900,000 |
| As above, but the home is left to a nephew | £650,000 | £0 | £650,000 |
| Both bands unused; estate of £2.4 million including an £800,000 home left to the children | £650,000 | £150,000 (£350,000 less £200,000 taper) | £800,000 |
| First spouse left £162,500 to the children; residence band unused; £500,000 home to the children | £487,500 (50% transferred) | £350,000 | £837,500 |
Try your own figures in the inheritance tax calculator, which lets you set the unused percentages.
What if someone was widowed more than once?
Unused percentages from more than one late spouse or civil partner can be added together, but the total is capped at 100% of each band. HMRC’s manual gives the example of a widow whose two late husbands left 60% and 80% of their bands unused: her extra nil-rate band is limited to 100%, not 140% (IHTM43031; IHTM46041 for the residence band).
How do executors claim the transfer?
- Check whether the estate is excepted. For deaths on or after 1 January 2022, an estate worth £650,000 or less that is transferring a late spouse’s unused threshold can be excepted, and the claim is made when applying for probate.
- Otherwise send a full account. Use form IHT400 with schedule IHT402 for the nil-rate band (GOV.UK: IHT402) and schedules IHT435 and IHT436 for the residence band (GOV.UK: IHT436).
- Include documents from the first death: a copy of the grant, or the death certificate if there was no grant; a copy of the will; and any deed of variation (IHTM43006).
- Claim in time. The deadline is 24 months after the end of the month in which the survivor died, or 3 months after the executors first acted if later. HMRC can extend it (IHTM43007; IHTM46042).
HMRC’s example: if the survivor died on 10 October 2014, the claim had to be received by 31 October 2016. If the executors do not claim, someone else liable for the tax, such as the recipient of a gift, can ask HMRC to accept a later claim.
If you are the surviving spouse, keep the first death’s paperwork with your own will. Tell your executors where it is; the executor handover template has space for this.
Should the first spouse leave everything to the survivor?
For many couples it is the simplest way to keep both sets of allowances for the second death, because a gift to a spouse is exempt and leaves the first person’s bands unused. It is not right for everyone:
- Large combined estates. If everything ends up in the survivor’s estate and it is over £2 million, the taper can wipe out residence bands that would have been usable if assets had been split.
- Children from earlier relationships. The survivor can change their will and leave nothing to your children. See second marriage with children.
- Farms and businesses. From 6 April 2026 each person has a £2.5 million allowance for 100% agricultural and business property relief, and unused allowance also transfers to a surviving spouse or civil partner. If the first death was before 6 April 2026, a full £2.5 million is assumed to be available to transfer (HMRC policy paper).
- Pensions from April 2027. Pension funds passing to children rather than to the spouse will use the first person’s allowances. See pensions and inheritance tax.
Mirror wills that leave everything to each other and then to the children suit many couples with straightforward estates. Couples whose combined estate is near or above £2 million, or who own business or farm property, need individual tax advice.
When should you get advice?
Get advice from a solicitor or tax adviser if you want trusts in your wills, your estates are large, you own a business or farm, you have a complicated marriage history, or you are unsure how much of a late spouse’s band was used. SwiftWill’s automated will does not do tax planning: it records who inherits, and it cannot check whether allowances will transfer or draft the trusts sometimes used in larger estates. Start with our inheritance tax guide and when to use a solicitor.
Sources
- GOV.UK: transferring unused basic threshold for inheritance tax
- GOV.UK: transferring unused residence nil-rate band
- GOV.UK: form IHT402
- GOV.UK: form IHT436
- HMRC Inheritance Tax Manual, IHTM43000 (transferable nil-rate band)
- HMRC Inheritance Tax Manual, IHTM46040 to IHTM46044 (brought-forward residence band)
- GOV.UK: how to value an estate and report its value
- Inheritance Tax Act 1984, sections 8A to 8G
- HMRC: agricultural property relief and business property relief changes
Sources checked 24 September 2026.