Assets passed to a surviving spouse or civil partner are completely exempt from Inheritance Tax — with no upper limit. Understand how the exemption works, what common law partners miss out on, and how to maximise your combined allowances.
Unlimited
Spousal Exemption
No upper limit on assets passed to a UK-domiciled spouse or civil partner.
£325,000
Standard Nil-Rate Band
Each individual's tax-free threshold — frozen since 2009.
£650,000
Couples' Combined Threshold
Transferable nil-rate band doubles the tax-free amount for surviving spouses.
£1,000,000
With Residence NRB
Couples leaving their home to direct descendants can shelter up to £1 million.
The spousal exemption is one of the most powerful reliefs in UK Inheritance Tax law. Under section 18 of the Inheritance Tax Act 1984, transfers of assets between spouses and civil partners — whether on death or during lifetime — are completely exempt from IHT, provided both parties are UK-domiciled.
There is no upper limit. A £5 million estate left entirely to a surviving spouse attracts zero Inheritance Tax. This is fundamentally different from gifts to children or other beneficiaries, which are subject to the 40% rate on amounts above the nil-rate band.
The exemption applies equally to married couples and civil partners. It does not apply to cohabiting couples — sometimes called common law partners — regardless of how long they have lived together.
Common Law Partners Are Not Protected
Cohabiting couples have no automatic IHT exemption. If you are not married or in a civil partnership, assets left to your partner will be subject to IHT at 40% on amounts above £325,000. Marriage or civil partnership is the only way to access the spousal exemption.
When you die, any assets you leave to your spouse or civil partner pass completely free of Inheritance Tax — regardless of the value. There is no cap. A £2 million estate left entirely to a spouse attracts zero IHT.
Transfers between spouses during your lifetime are also immediately exempt from IHT. Unlike gifts to other people — which require you to survive seven years — interspousal transfers are exempt from the moment they are made.
If the first spouse to die does not use all of their nil-rate band (for example, because they left everything to the survivor), the unused percentage is transferred to the surviving spouse's estate — effectively doubling the tax-free threshold to £650,000.
The Residence Nil-Rate Band (RNRB) of up to £175,000 — which applies when leaving a main home to direct descendants — is also transferable between spouses. This means couples can shelter up to £1 million from IHT.
The difference in IHT treatment between married couples and cohabiting partners is stark.
| Issue | Married / Civil Partners | Common Law Partners |
|---|---|---|
| IHT on assets at death | 0% — unlimited exemption | 40% on amounts above £325,000 |
| Lifetime transfers | Immediately exempt | Subject to 7-year rule (PETs) |
| Transferable nil-rate band | Yes — up to £325,000 extra | Not available |
| Transferable RNRB | Yes — up to £175,000 extra | Not available |
| Combined tax-free threshold | Up to £1,000,000 | £325,000 only |
| Non-UK domiciled spouse | Limited exemption (£325,000) unless electing UK domicile | N/A |
The unlimited spousal exemption applies only where both spouses are UK-domiciled. If your spouse is not UK-domiciled, the exemption is capped at £325,000 — the same as the standard nil-rate band.
The spousal exemption defers IHT — it does not eliminate it. These strategies help reduce the bill on the second death.
Leaving everything to your spouse defers the IHT problem — it does not eliminate it. On the second death, the full combined estate is assessed. Without planning, a large estate can face a significant IHT bill.
Consider leaving assets up to the nil-rate band (£325,000) to children or a trust on first death, rather than everything to the spouse. This uses the first nil-rate band immediately rather than relying on the transfer mechanism.
A Protective Property Trust in your will can protect your share of the family home while still allowing your spouse to live there for life. This preserves your nil-rate band and protects the property from care fees and remarriage risks.
To claim the transferable nil-rate band on the second death, executors must submit forms IHT400 and IHT402 with evidence of the first spouse's estate. Keep marriage certificates, wills, and grant of probate documents safely.
If you remarry after being widowed, the transferable nil-rate band from your first spouse is not lost — but your estate planning should be reviewed to ensure it still achieves your goals.
If the first spouse's will did not maximise the nil-rate band, a Deed of Variation can redirect assets within two years of death to preserve the allowance and reduce the eventual IHT bill.
Related Guides
Transferable Nil Rate Band
How to claim the unused nil-rate band from the first spouse's estate.
Protective Property Trusts
Protect your share of the family home while preserving your nil-rate band.
Inheritance Tax Explained
Who pays IHT, how it is calculated, and strategies to reduce the bill.
Residential Nil Rate Band
The additional £175,000 allowance for leaving your home to direct descendants.
Deed of Variation
Redirect inheritance within two years of death to optimise tax relief.
Cohabitee Inheritance Rights
What happens to your estate if you are not married and die without a will.
No — there is no upper limit on the spousal exemption, provided both spouses are UK-domiciled. Assets of any value can pass between spouses or civil partners completely free of IHT.
Yes. Civil partners have exactly the same IHT protections as married couples. The unlimited spousal exemption, the transferable nil-rate band, and the transferable Residence Nil-Rate Band all apply equally.
No. Common law partners — couples who live together but are not married or in a civil partnership — do not qualify for the spousal exemption. Assets left to a common law partner are subject to IHT at 40% on amounts above £325,000.
If you leave everything to your spouse, your nil-rate band is unused. The unused percentage is transferred to your spouse's estate and can be claimed on the second death — effectively doubling the tax-free threshold to £650,000.
The Residence Nil-Rate Band (RNRB) is an additional £175,000 allowance that applies when you leave your main home to direct descendants (children, stepchildren, grandchildren). It is transferable between spouses in the same way as the standard nil-rate band, allowing couples to shelter up to £1 million from IHT.
If your spouse is not UK-domiciled, the unlimited spousal exemption does not apply in full. The exemption is capped at £325,000. Your spouse can elect to be treated as UK-domiciled for IHT purposes, but this has wider tax implications and requires careful advice.
Yes. Transfers between spouses during your lifetime are immediately exempt from IHT — unlike gifts to other people, which require you to survive seven years to become fully exempt.
Leaving everything to your spouse defers the IHT problem rather than eliminating it. On the second death, the full combined estate is assessed. Careful planning — including the use of trusts and both nil-rate bands — can significantly reduce the eventual bill.
A Deed of Variation allows beneficiaries to redirect their inheritance within two years of death. If the first spouse's will did not make optimal use of the nil-rate band, a Deed of Variation can redirect assets to preserve the allowance and reduce the IHT bill on the second death.
Executors of the second spouse's estate must actively claim the transferable nil-rate band by submitting forms IHT400 and IHT402 to HMRC, along with supporting documents including the marriage certificate, the first spouse's will, and the grant of probate. The claim must be made within 24 months of the second death.
The spousal exemption is a powerful tool — but it works best as part of a wider estate plan. Our wills and estate planning solicitors in Chester can help you structure your estate to minimise IHT for the next generation.
Transferable Nil Rate Band
Claim the unused nil-rate band from the first spouse's estate to double the tax-free threshold.
Protective Property Trusts
Protect your share of the family home while allowing your spouse to live there for life.
Inheritance Tax Planning
Strategies to reduce your IHT bill — from lifetime gifting to trusts and reliefs.
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