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Transferable Nil-Rate Band: How Married Couples Can Inherit Up to £1 Million Tax-Free

· 18 min

Note: The following scenario is fictional and used for illustration.

Margaret, 68, thought she'd lost half her inheritance tax allowance when her husband David died in 2019. David's will left their £400,000 house to Margaret, along with his £180,000 savings—all spouse-exempt transfers that used none of his £325,000 nil-rate band. For five years, Margaret believed his allowance was "wasted."

When she consulted a solicitor about updating her own will in 2024, she discovered the transferable nil-rate band. Because David used 0% of his nil-rate band, Margaret could claim his full £325,000 allowance on top of her own. Combined with both residence nil-rate bands, her estate could now pass £1 million to their children completely tax-free—saving them £190,000 in inheritance tax. She just needed to ensure her executors completed form IHT402 within 24 months of her death.

Over 95% of married couples qualify for the transferable nil-rate band, yet many executors miss claims due to confusion about eligibility or deadlines. Inheritance tax liabilities reached £6.70 billion in tax year 2022-23, with thresholds frozen until 2030/31, making TNRB increasingly valuable.

This guide explains exactly how TNRB works, who qualifies, how to calculate the transferable percentage, and the step-by-step claims process to maximize your family's tax-free inheritance.

Table of Contents

What Is the Transferable Nil-Rate Band?

The transferable nil-rate band (TNRB) allows any unused inheritance tax allowance from a deceased spouse or civil partner to transfer to the surviving partner's estate when they die.

Before 9 October 2007, couples faced a frustrating problem. If Spouse A left everything to Spouse B using spouse exemption (unlimited tax-free transfers between spouses), Spouse A's £325,000 nil-rate band was "wasted." When Spouse B died, only their own nil-rate band protected the estate from 40% inheritance tax.

This forced couples to choose between immediate tax efficiency (leaving everything to the surviving spouse) or preserving the nil-rate band (creating complex trusts). The transferable nil-rate band, introduced through Sections 8A-C of the Inheritance Tax Act 1984, solved this by ensuring any unused portion transfers to the survivor's estate.

The critical principle: The unused percentage transfers, not a fixed amount. This protects beneficiaries if thresholds change. If your spouse used 0% of their nil-rate band in 2010, you don't inherit the 2010 threshold—you inherit 100% of today's threshold.

Currently, the nil-rate band stands at £325,000, frozen until 2030/31. The residence nil-rate band adds another £175,000 for qualifying estates with property passing to direct descendants. Together, these create the potential £1 million allowance for married couples.

Example: David died in 2015, leaving his £500,000 estate to his wife Margaret. Because of spouse exemption, his estate paid £0 tax and used 0% of his nil-rate band. When Margaret dies, her executors can claim £650,000 in combined nil-rate bands (her £325,000 plus David's £325,000), saving £130,000 in inheritance tax.

How Much Can Married Couples Inherit Tax-Free?

A married couple can pass on up to £1 million tax-free when both partners use their full allowances strategically. The maximum depends on whether you have qualifying residential property and whether your estate exceeds certain thresholds.

Without property going to children (NRB only): Combine two nil-rate bands: £325,000 + £325,000 = £650,000 total protection from inheritance tax.

With property going to children (NRB + RNRB): The full £1 million allowance requires combining both nil-rate bands (£650,000) with both residence nil-rate bands (£175,000 × 2 = £350,000).

To claim the full £1 million:

  • Both spouses must have used 0% of their nil-rate band (typically by leaving everything to each other via spouse exemption)
  • The estate must include qualifying residential property
  • That property must pass to direct descendants (children, grandchildren, step-children, adopted children)
  • The estate value must stay under £2 million (the RNRB taper threshold)

The tapering rule reduces protection for larger estates. For every £2 over £2 million, RNRB reduces by £1. Estates over £2.35 million lose RNRB entirely. For couples, combined estates over £2.7 million lose all RNRB benefit.

Scenario NRB Available RNRB Available Total Tax-Free Tax on £1.5M Estate
Single person £325,000 £175,000 £500,000 £400,000 @ 40% = £160,000
Married couple (full TNRB) £650,000 £350,000 £1,000,000 £200,000 @ 40% = £80,000

Example: Robert and Linda own a £600,000 house and £400,000 in savings. Robert dies first, leaving everything to Linda (0% NRB used). When Linda dies leaving the house to their children, her executors claim £650,000 combined NRB plus £350,000 combined RNRB = £1 million tax-free. Result: £0 inheritance tax.

Since 6 April 2020, qualifying estates can pass on up to £1 million tax-free, making TNRB planning essential for married couples.

Who Qualifies for the Transferable Nil-Rate Band?

The transferable nil-rate band applies exclusively to legally married couples and registered civil partners. This strict requirement creates significant inheritance tax differences between married and unmarried couples.

Eligible relationships:

  • All legally married couples, regardless of when the marriage occurred
  • Registered civil partners (from 5 December 2005)
  • Same-sex marriages (from 29 March 2014)
  • Overseas marriages recognized as valid under UK law

References to "spouse" apply equally to civil partners.

Timing requirements: The surviving spouse must die on or after 9 October 2007 to claim TNRB. However, the first spouse can have died at any time—even decades before the law was introduced—and the unused nil-rate band still transfers at current rates.

This retroactive application means TNRB claims can reach back to any death, regardless of how long ago it occurred.

Example: Thomas died in 1995, leaving his £200,000 estate entirely to his wife Elizabeth. In 1995, the nil-rate band was £154,000, but TNRB didn't exist yet. Elizabeth dies in 2025. Her executors can claim Thomas's unused 100% nil-rate band at 2025 rates (£325,000), even though he died 30 years before the legislation was passed.

Who cannot claim TNRB:

  • Unmarried couples and cohabiting partners, regardless of relationship length
  • Common-law partnerships (not recognized for inheritance tax)
  • Divorced ex-spouses (divorce breaks the transfer right)

Separated spouses who were not legally divorced at the time of death may still be eligible, though these situations require legal advice.

Over 95% of married couples qualify for TNRB, primarily because most first deaths involve leaving assets to the surviving spouse through spouse exemption, which uses 0% of the nil-rate band.

How the Transferable Percentage Is Calculated

HMRC bases claims on percentages, not fixed amounts. The formula:

Transferable percentage = 100% - (amount used ÷ nil-rate band at first death × 100)

Transferable amount = transferable percentage × current nil-rate band

Step-by-step calculation:

  1. Determine the first spouse's estate value
  2. Subtract spouse-exempt transfers (everything to surviving spouse)
  3. Subtract other exempt transfers (charities, etc.)
  4. Calculate remaining chargeable estate (this used the nil-rate band)
  5. Work out percentage used at first death
  6. Unused percentage transfers at current rates

Example 1 - Full transfer: Janet died in 2010, leaving everything to husband Peter. Chargeable estate: £0. Used: 0%. When Peter dies in 2025: 100% × £325,000 = £325,000 transfers.

Example 2 - Partial transfer: Michael died in 2008 (NRB: £312,000), leaving £156,000 to children and residue to wife Sarah. Used: £156,000 ÷ £312,000 = 50%. When Sarah dies in 2025: 50% × £325,000 = £162,500 transfers. Sarah's total: £487,500.

Key point: If everything went to your spouse, that's automatic 100% transfer. Lifetime gifts within seven years can reduce transferable percentage.

Transferable Nil-Rate Band with Multiple Marriages

If you've been widowed more than once, you can claim unused nil-rate band from all previous spouses, capped at 100% of the current threshold (£325,000).

Eleanor married three times. All three husbands left her everything (100% unused each). Total: 300%. Capped at 100% = £325,000. Eleanor's total NRB: £325,000 (her own) + £325,000 (capped TNRB) = £650,000.

David married twice. First wife Anne used 32% (leaving 68% unused). Second wife Barbara used 50% (leaving 50%). Total: 118%. Capped at 100% = £325,000. David's total NRB: £650,000.

Where both spouses were previously widowed, the combined maximum is £1,300,000 (four NRBs) plus up to £700,000 RNRB. This is rare but legally possible.

When claiming from multiple marriages, complete separate IHT402 forms for each deceased spouse with full documentation.

Transferable Residence Nil-Rate Band (TRNRB)

The residence nil-rate band provides an additional £175,000 allowance when residential property passes to direct descendants. Any unused portion transfers to your surviving spouse.

Introduced on 6 April 2017, the RNRB reached £175,000 in 2020-21. You can claim 100% RNRB transfer even if your spouse died before 2017.

Philip died in 2010, leaving everything to wife Anne. When Anne dies in 2025, she claims Philip's unused 100%: £175,000. Anne's total RNRB: £350,000. Combined with NRB, Anne's estate has £1 million tax-free.

RNRB requirements:

  • Qualifying residential property owned by deceased
  • Property passes to direct descendants (children, grandchildren, step-children, adopted children)
  • Estate under £2 million (tapering applies above)

Downsizing relief: If you sold your home or downsized after 8 July 2015, you may still qualify if equivalent value passes to descendants. See downsizing relief guidance.

Tapering: Estates over £2 million lose £1 RNRB for every £2 over the threshold. Estates over £2.35 million lose RNRB entirely.

Claim TRNRB using form IHT435 and form IHT436.

How to Claim the Transferable Nil-Rate Band (Form IHT402)

TNRB is not automatic. Executors must make a formal claim when the surviving spouse dies.

Required forms:

  • IHT400 - main inheritance tax account
  • IHT402 - TNRB claim schedule
  • IHT435 and IHT436 if claiming TRNRB

Required documents from first death:

  • Death certificate
  • Will (if one existed)
  • Grant of representation/probate (if obtained)
  • Any Deed of Variation
  • IHT forms from first death (if available)

Claim process:

Step 1: Calculate unused percentage from first death (see calculation section). If everything went to surviving spouse, it's 100%.

Step 2: Complete form IHT402 following HMRC guidance:

  • Section A: Details of the deceased (surviving spouse)
  • Section B: Details of the predeceased spouse or civil partner
  • Section C: Calculate the transferable nil-rate band
    • Box 1: Nil-rate band at first death
    • Box 2: Value of chargeable transfers at first death
    • Box 3: Unused percentage
  • Section D: Supporting documents checklist

Step 3: Attach IHT402 to IHT400. The IHT402 is a supplementary schedule and cannot be submitted alone—it must accompany the full IHT400 account for the surviving spouse's estate.

Step 4: Submit to HMRC Inheritance Tax, BX9 1HT. Processing time typically runs 3-6 months. HMRC may request additional evidence of how the first spouse's estate was distributed.

Claim deadline: 24 months from the end of the month in which the surviving spouse died, or 3 months from when personal representatives first acted, whichever is later.

Deadline example: Spouse dies 15 March 2025. End of month: 31 March 2025. Twenty-four months later: 31 March 2027. Claim deadline: 31 March 2027.

HMRC may grant deadline extensions in exceptional circumstances, but don't rely on this—submit within the standard deadline.

If claiming TNRB, the estate may no longer qualify as an "excepted estate" and will require full IHT400 even if below normal thresholds.

HMRC Inheritance Tax Helpline: 0300 123 1072 (UK) or +44 300 123 1072 (overseas). Advisors can help with form completion but cannot give legal or tax planning advice.

Common Mistakes When Claiming TNRB

1. Missing the claim deadline Executors assume TNRB applies automatically and never submit IHT402. Impact: losing up to £325,000 tax-free allowance equals £130,000 extra inheritance tax. Solution: diarize the 24-month deadline immediately upon death and set a reminder for 18 months to start gathering documents.

2. Assuming excepted estates don't need claims The estate is small (under the excepted estate threshold), so executors don't file IHT400 or IHT402. Impact: TNRB claims require formal submission even for excepted estates. Solution: if claiming TNRB (even partially), you must file full IHT400 plus IHT402, regardless of estate size.

3. Using fixed amounts instead of percentages Executors calculate TNRB as a fixed amount from the first death, not a percentage. Example: First spouse died in 2009 when the nil-rate band was £325,000. They used £100,000, leaving £225,000 unused. Executors incorrectly claim £225,000. Correct calculation: they used 31% (£100,000 ÷ £325,000), leaving 69% unused = 69% × £325,000 (current rate) = £224,250. Solution: always calculate and claim the percentage, not the fixed amount.

4. Missing documentation from the first death Executors can't locate the first spouse's will, probate documents, or estate details. HMRC may reject the claim without proof of how much nil-rate band was used. Solution: order a copy of the probate grant from the Probate Registry (£1.50 fee), request a copy of the will from the probate registry if lost, or if no probate was obtained, provide the death certificate plus evidence the estate passed to the surviving spouse (bank statements showing account transfers, property deeds).

5. Forgetting lifetime gifts from the first death The first spouse made large gifts within seven years of death that used some nil-rate band, but executors claim 100% transfer. Example: First spouse gave £200,000 to children three years before death, then left remaining estate to surviving spouse. That £200,000 gift used nil-rate band. HMRC will recalculate and reduce the TNRB claim, potentially with penalties. Solution: check for gifts made in the seven years before the first death and include these in "chargeable transfers" when calculating the unused percentage.

6. Claiming from divorced spouse Executors claim TNRB from a former spouse the deceased divorced before death. This results in automatic rejection. Only legally married spouses or civil partners at the time of death qualify. Solution: only claim from spouses you were married to (or in civil partnership with) at the moment of their death.

7. Not claiming from all previous spouses The surviving spouse was widowed twice, but executors only claim from the most recent spouse. Impact: losing TNRB from the earlier spouse (up to the 100% cap). Solution: submit separate IHT402 forms for each deceased spouse, claiming all unused percentages up to the 100% total cap.

8. Forgetting residence nil-rate band transfer Executors claim TNRB on IHT402 but forget to claim transferable residence nil-rate band on IHT436. Impact: losing up to £175,000 residence nil-rate band (£70,000 extra inheritance tax). Solution: check both IHT402 for main nil-rate band transfer and IHT435 plus IHT436 for residence nil-rate band transfer.

9. Nil-rate band trust confusion The first spouse's will created a "nil-rate band trust" (common pre-2007 tax planning). Executors become unsure if TNRB applies. The impact is complex and depends on whether the trust was properly constituted and what assets it holds. Solution: seek legal advice. HMRC guidance states that partially or unconstituted trusts may still allow TNRB claims.

To avoid these mistakes: use HMRC's digital assistant for an initial eligibility check, consider professional help (solicitor or tax advisor) for complex estates, double-check all calculations before submitting, and keep copies of all submitted forms and evidence.

Making Sure Your Spouse Can Claim Your Full Nil-Rate Band

The best time to maximize TNRB is now—when creating your will.

Strategy 1: Leave everything to your spouse Result: 0% NRB used, 100% transfers (full £325,000). Works best when combined estates under £1-2 million.

Strategy 2: Partial gifts with spouse as main beneficiary Example: £50,000 to children, residue to spouse. NRB used: 15%. Transferable: 85% = £276,250.

Strategy 3: Maximize RNRB transfer Leave everything to your spouse (0% RNRB used, 100% transfers). Your spouse's will then passes property to children, claiming both RNRBs.

What NOT to do:

Don't create nil-rate band discretionary trusts unless you have second marriage concerns or estates over £2 million. Pre-2007 wills often include these, which use 100% of NRB—nothing transfers. Update old wills to use TNRB instead.

Don't leave large sums to non-exempt beneficiaries without planning. £325,000 to children = 100% NRB used = 0% transfers.

Do review wills created before 2007 for outdated NRB trust provisions.

Do coordinate with your spouse's will. Mirror wills work well: both leave everything to each other, children as backup.

Do document lifetime gifts and inform executors about gifts within 7 years of death.

Do update wills after major life events: marriage, divorce, children, or estate value changes.

Valid wills must be in writing, signed before two independent witnesses (who aren't beneficiaries).

Frequently Asked Questions

Q: What is the transferable nil-rate band in the UK?

A: The transferable nil-rate band (TNRB) allows any unused inheritance tax allowance from a deceased spouse or civil partner to transfer to the surviving partner's estate. Since 9 October 2007, this means married couples can combine their £325,000 nil-rate bands to pass on up to £650,000 tax-free, or up to £1 million when including residence nil-rate bands.

Q: How much can a married couple inherit tax-free with the transferable nil-rate band?

A: A married couple can inherit up to £1 million tax-free when both nil-rate bands (£325,000 each equals £650,000) and both residence nil-rate bands (£175,000 each equals £350,000) are fully transferred. This applies when the first spouse leaves everything to the surviving spouse and the estate includes a qualifying residential property passed to direct descendants.

Q: How do I claim the transferable nil-rate band from my deceased spouse?

A: You claim the transferable nil-rate band using form IHT402 when completing the IHT400 form after the surviving spouse's death. The claim must be made within 24 months from the end of the month in which the surviving spouse died, or within three months from when the personal representatives first acted, whichever is later.

Q: Can I transfer nil-rate band from multiple previous marriages?

A: Yes, if you've been widowed more than once, you can claim unused nil-rate band from multiple deceased spouses or civil partners. However, the total transferable amount is capped at 100% of the current nil-rate band (£325,000), regardless of how many previous marriages you had.

Q: What happens to the transferable nil-rate band if my spouse used some of their allowance?

A: You can transfer the unused percentage. For example, if your spouse used £162,500 (50%) of their £325,000 nil-rate band, you can transfer the remaining 50%, which equals £162,500 at current rates. The percentage transfers, not the fixed amount, so it adjusts for future threshold changes.

Q: Does the transferable nil-rate band apply to unmarried couples?

A: No. The transferable nil-rate band only applies to legally married couples and registered civil partners. Unmarried couples, including long-term cohabiting partners, cannot transfer unused nil-rate band to each other, making inheritance tax planning more complex for these relationships.

Q: Can I claim transferable nil-rate band if my spouse died before 2007?

A: Yes. Even though the transferable nil-rate band legislation came into effect on 9 October 2007, you can claim unused nil-rate band from a spouse who died before this date, provided you die on or after 9 October 2007. The unused percentage from their estate will transfer to your estate at current rates.

Need Help with Your Will?

Understanding how the transferable nil-rate band works helps you structure your will to maximize your spouse's future inheritance tax savings. Clear will planning now ensures your executors have the documentation they need to claim your full unused allowance.

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Legal Disclaimer:

This article provides general information only and does not constitute legal or financial advice. WUHLD is not a law firm and does not provide legal advice. Laws and guidance change and their application depends on your circumstances. For advice about your situation, consult a qualified solicitor or regulated professional. Unless stated otherwise, information relates to England and Wales.

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