Inheritance tax: married couples vs unmarried partners and the spouse exemption

How inheritance tax works

Inheritance tax is charged at 40 per cent on the value of an estate above the nil-rate band of 325,000 pounds. An additional residence nil-rate band of up to 175,000 pounds can apply when a main home passes to direct descendants, lifting an individual’s total allowance to as much as 500,000 pounds. These bands are frozen until April 2030.

The nil-rate band is the amount an individual can pass on without inheritance tax being due. For the 2026-27 tax year, this threshold stands at 325,000 pounds per person. Anything above this figure is taxed at 40 per cent, although certain reliefs and exemptions can reduce the final bill.

A residence nil-rate band of up to 175,000 pounds is available when a person’s main home is left to children or grandchildren. This includes biological children, adopted children, stepchildren and foster children. The residence nil-rate band is tapered for estates valued at more than 2 million pounds, reducing by 1 pound for every 2 pounds over this threshold.

When the residence nil-rate band is combined with the standard nil-rate band, an individual can pass on up to 500,000 pounds free of inheritance tax. For a married couple or civil partners, any unused portion of both allowances can be transferred to the surviving spouse, meaning a couple can pass on as much as 1 million pounds in some cases.

The nil-rate band and residence nil-rate band are both frozen until April 2030. This means the thresholds will not rise with inflation, and more estates are likely to become liable for inheritance tax over time as property and asset values increase.

The spouse exemption and why marriage matters

Assets left to a spouse or civil partner are exempt from inheritance tax with no upper limit, provided the surviving partner is UK domiciled. This is known as the spouse exemption. Any unused nil-rate band from the first death can also transfer to the survivor, effectively doubling the allowance available on the second death.

The spouse exemption is one of the most significant reliefs in the inheritance tax system. When one partner dies, everything they leave to their spouse or civil partner passes free of inheritance tax, regardless of the value. There is no cap on this exemption, unlike other reliefs which are subject to limits.

In addition to the exemption itself, any unused portion of the deceased partner’s nil-rate band transfers to the survivor. This means that on the second death, the surviving spouse can claim the deceased partner’s allowance as well as their own. The same applies to the residence nil-rate band, provided the conditions are met.

This transferable allowance is a key reason why marriage or civil partnership can remove an inheritance tax bill entirely between partners. A couple with combined assets of up to 1 million pounds can pass everything to their children or grandchildren without inheritance tax being due, as long as the main home is included and the residence nil-rate band applies.

The spouse exemption applies only to spouses and civil partners. It does not extend to unmarried partners, regardless of the length of the relationship or the nature of the commitment between them.

Why cohabiting couples are treated differently

HMRC does not treat cohabiting partners as spouses, however long they have lived together. There is no spouse exemption for unmarried partners, so assets left to them are taxed at 40 per cent above the nil-rate band. This distinction has prompted public figures such as Ricky Gervais to consider marriage primarily for tax reasons.

For inheritance tax purposes, the law draws a clear line between married couples and civil partners on one side, and cohabiting couples on the other. Living together for decades, raising children together or sharing finances does not change this position. HMRC treats unmarried partners as separate individuals with no automatic inheritance tax rights.

The practical consequence is significant. When an unmarried person dies and leaves assets to their partner, the spouse exemption does not apply. The estate is taxed at 40 per cent on any value above the 325,000 pound nil-rate band. The residence nil-rate band may also be unavailable if the home does not pass to direct descendants.

Ricky Gervais told Saga Magazine, as reported in August 2026, that he plans to marry his long-term partner mainly to use the spouse exemption. The couple’s combined wealth is widely reported at around 142 million pounds. Without the exemption, a substantial portion of that estate could be liable to inheritance tax on the first death.

The distinction between married and unmarried couples is a deliberate feature of the tax system, but it creates a significant financial disadvantage for cohabiting partners. This is why some unmarried couples choose to marry or enter a civil partnership specifically to secure the exemption and the transferable nil-rate band.

Options unmarried couples sometimes consider

Marriage or civil partnership is the only way to secure the spouse exemption and the transferable nil-rate band. A valid will controls who inherits, as unmarried partners have no automatic entitlement under intestacy rules. Gifts made more than seven years before death normally fall outside inheritance tax under the seven-year rule.

For unmarried couples who wish to reduce a potential inheritance tax bill, the most straightforward option is to marry or enter a civil partnership. This secures the spouse exemption, removes the tax charge on assets passing between partners, and allows any unused nil-rate band to transfer to the survivor.

A valid will is essential for unmarried partners. Under intestacy rules, which apply when someone dies without a will, an unmarried partner has no automatic right to inherit. The estate passes to blood relatives, and the partner may receive nothing. A will ensures that assets pass according to the deceased person’s wishes.

Gifting assets during lifetime is another option. Gifts made more than seven years before death are normally free of inheritance tax. If the donor dies within seven years, taper relief may reduce the tax due on gifts made between three and seven years before death. This can be a useful planning tool, but it requires careful timing and consideration of the donor’s need for the assets.

This is general information and not advice. A solicitor or tax adviser can set out the options for a specific estate, taking into account the individual circumstances of the couple, the value of their assets and their long-term intentions.

Frequently asked questions

How much can you inherit tax-free?

The nil-rate band is 325,000 pounds per person. With the residence nil-rate band, an individual can pass on up to 500,000 pounds. A married couple can pass on up to 1 million pounds in some cases.

Do unmarried partners pay inheritance tax?

Yes. Cohabiting couples receive no spouse exemption, so assets left to a partner are taxed at 40% above the nil-rate band.

Is there inheritance tax between married couples?

No. Assets left to a spouse or civil partner are exempt from inheritance tax with no limit, provided the survivor is UK domiciled.

What is the inheritance tax rate?

The inheritance tax rate is 40% on the value of an estate above the available nil-rate band.

Are the inheritance tax thresholds changing?

The nil-rate bands are frozen until April 2030, so they will not change before then.