TL;DR: When the second parent in a marriage or civil partnership dies, their estate can use two sets of inheritance tax allowances: their own, plus any unused portion transferred from the first parent who died. The nil-rate band is 325,000 pounds per person and the residence nil-rate band is up to 175,000 pounds per person, so a couple's estate can potentially pass on up to 1 million pounds before the 40 percent charge applies. The transfer is not automatic. The personal representatives must claim it from HMRC after the second death, normally within 24 months.
Last reviewed May 2026
Inheritance tax is charged on the estate of someone who has died: their property, money and possessions, less debts and reliefs. For most families the question becomes pressing not on the first death but on the second, because transfers between spouses and civil partners are exempt from inheritance tax, so the first death often produces no bill at all. The tax position of the whole family is usually settled when the second parent dies.
The reason the second death matters is that the surviving parent's estate can carry two sets of allowances. Understanding how that works, and what the personal representatives have to do to claim it, is the difference between a family passing on up to 1 million pounds tax-free and an avoidable 40 percent charge on a large slice of the estate. This guide sets out the rules, the figures, the forms and the deadlines, drawn from current HMRC guidance and the Inheritance Tax Act 1984.
Why the second death is the one that counts
When the first parent dies and leaves everything, or most things, to the surviving spouse or civil partner, those transfers are exempt. The spouse exemption means assets passing between married partners or civil partners are not taxed, regardless of value. Because of this, the first estate often uses none, or very little, of its inheritance tax allowances.
That unused allowance is not lost. The portion that was not used is preserved and can be transferred to the surviving partner's estate, to be set against it when the second parent dies. So the second estate is the point at which the family's full inheritance tax position is calculated, and the point at which any tax actually becomes payable.
This is why advisers describe the second death as the taxable event for most couples. It is also why mistakes at this stage are costly: the personal representatives of the second estate are dealing with two people's allowances at once, and the rules for claiming the transferred portion are specific.
The two allowances: nil-rate band and residence nil-rate band
There are two separate allowances within inheritance tax, and both can be transferred between spouses and civil partners.
The nil-rate band is the standard allowance. It is set at 325,000 pounds per person and has been frozen at that level since the 2009 to 2010 tax year. In the 2025 Budget the Chancellor confirmed it will remain frozen until April 2031. Any asset type can be set against the nil-rate band.
The residence nil-rate band is an additional allowance, introduced in the 2017 to 2018 tax year. It is worth up to 175,000 pounds per person and applies only when a main residence is passed to direct descendants, which means children, grandchildren and certain others such as stepchildren, adopted children and foster children. It cannot be used for a property left to siblings, friends or other non-descendants.
Combined, a single person's estate can therefore shield up to 500,000 pounds, being 325,000 pounds plus 175,000 pounds. Where the second estate can also claim the transferred allowances from the first death, the total can reach 1 million pounds, being two nil-rate bands of 325,000 pounds and two residence nil-rate bands of 175,000 pounds. Reaching the full 1 million pounds depends on the second estate including a qualifying residential property left to direct descendants, and on neither parent having used their allowances during their own lifetime or in their own estate.
How the transfer is calculated: percentages, not fixed sums
The single most important point about the transfer is that it works as a percentage, not a fixed amount of money. When the first parent dies, HMRC records the proportion of each allowance that was not used. That percentage is what transfers, applied to the allowance level in force at the date of the second death.
The practical effect is that the family is protected if the thresholds rise. If the first parent used none of their nil-rate band, 100 percent transfers. When the second parent dies, the survivor's estate then has its own full nil-rate band plus another full nil-rate band, both at whatever the current figure is, not at the figure that applied years ago when the first parent died.
The same percentage mechanism applies to the residence nil-rate band. If the first parent's estate used part of an allowance, only the remaining percentage transfers. A single person can hold a maximum of two nil-rate bands and two residence nil-rate bands, although where someone has survived more than one spouse the transferred portions can come from more than one earlier death, still subject to that overall cap of two.
Claiming the transfer: the forms and who submits them
The transfer does not happen automatically. It must be formally claimed, and the claim is made when the second parent dies, not when the first parent dies. HMRC should not be contacted on the first death to agree a transfer in advance.
The personal representatives of the second estate, meaning the executors named in the will or the administrators if there is no will, are responsible for making the claim. They do this alongside the main inheritance tax account. The claim to transfer the unused nil-rate band is made on form IHT402. The claim to transfer the unused residence nil-rate band is made on forms IHT435 and IHT436. These are submitted with the IHT400 account.
HMRC may ask for evidence of how the first parent's estate was distributed, such as a copy of the will and the grant of representation. Where the first death was many years ago and records are incomplete, personal representatives are entitled to complete the claim to the best of their ability based on the information available. One consequence worth noting: claiming a transferred allowance can mean the second estate no longer qualifies as an excepted estate, which can require the fuller IHT400 account even where the estate would otherwise have fallen below the reporting threshold.
Deadlines, the taper, and gifts that reduce the allowance
There is a time limit for claiming the transferred nil-rate band. It is generally 24 months from the end of the month in which the surviving parent died. Where the deadline is close and supporting documents are difficult to obtain, HMRC may accept a provisional claim. Inheritance tax itself is normally due within six months of the end of the month of death, and interest runs on tax paid late.
The residence nil-rate band is reduced for larger estates. It tapers away by 1 pound for every 2 pounds by which the estate exceeds 2 million pounds. This means a sizeable second estate may receive a reduced residence nil-rate band, or none at all, even where the property is left to direct descendants.
Lifetime gifts can also reduce the allowance available. A gift made within seven years of death that is not covered by an exemption may be brought back into the estate calculation and can use up part of the nil-rate band. This applies to each parent's own gifting history, so the personal representatives of the second estate need to consider gifts made by the surviving parent as well as the position carried over from the first death.
Disclaimer: This article is general information about how inheritance tax applies when the second parent dies. It is not financial, tax or legal advice. Inheritance tax rules are complex, the figures can change, and the outcome depends on individual circumstances including the value and make-up of the estate, lifetime gifts and the terms of each will. Anyone dealing with an estate should check current guidance on GOV.UK and consider professional advice from a solicitor or tax adviser, particularly where the estate is large or the first death involved a trust.
Frequently asked questions
Does the unused allowance always transfer in full?
Only the unused percentage transfers. If the first parent's estate used part of the nil-rate band, for example through a gift or a legacy to someone other than the spouse, only the remaining percentage passes to the second estate. If the first parent left everything to the surviving spouse, the transfer is usually 100 percent.
What if the parents were not married or in a civil partnership?
The ability to transfer unused allowances applies only to married couples and registered civil partners. Unmarried partners cannot transfer an unused nil-rate band or residence nil-rate band to each other, and transfers between unmarried partners on death are not covered by the spouse exemption.
Is the family home always covered by the residence nil-rate band?
No. The residence nil-rate band applies only where a main residence passes to direct descendants such as children or grandchildren, and it tapers away for estates worth more than 2 million pounds. A property left to other relatives or friends does not qualify, and a very large estate may lose the allowance entirely.
How long do the personal representatives have to claim the transfer?
The claim for the transferred nil-rate band is generally due within 24 months of the end of the month in which the surviving parent died. Inheritance tax itself is normally payable within six months of the end of the month of death, so the payment deadline can fall before the claim deadline.
Can a gift made years before death still affect the bill?
Yes. A gift made within seven years of death that is not covered by an exemption can be brought back into the estate and may use up part of the nil-rate band. The personal representatives of the second estate need to account for gifts made by the surviving parent as well as the position inherited from the first death.
How we verified this
The figures and rules in this guide were checked against current HMRC guidance on inheritance tax thresholds and the transfer of unused allowances, the House of Commons Library briefing on inheritance tax, and the Inheritance Tax Act 1984, which contains the transferable nil-rate band provisions at sections 8A to 8C. The nil-rate band of 325,000 pounds, the residence nil-rate band of up to 175,000 pounds, the 2 million pound taper threshold and the freeze to April 2031 reflect the position confirmed in the 2025 Budget. Figures and deadlines should be reconfirmed on GOV.UK before being relied on, as thresholds and processing arrangements can change.
Sources
- GOV.UK: Inheritance Tax overview, thresholds, rules and allowances
- GOV.UK: passing on a home and the residence nil-rate band
- GOV.UK / HMRC: nil-rate band and residence nil-rate band thresholds
- Inheritance Tax Act 1984, including the transferable nil-rate band provisions
- House of Commons Library: Inheritance Tax, a basic guide
