How It Works
Every individual has a nil rate band of £325,000. When a spouse leaves their entire estate to their partner (which is IHT-free under the spouse exemption), their nil rate band is unused. That unused percentage transfers to the surviving spouse and adds to their own nil rate band on death.
💡 Example: James dies leaving everything to his wife Sarah. 100% of his NRB (£325,000) is unused. Sarah already has her own NRB (£325,000). When Sarah dies, her estate benefits from a combined NRB of £650,000.
Adding the Residence Nil Rate Band
If the family home passes to direct descendants (children or grandchildren), an additional Residence Nil Rate Band (RNRB) of £175,000 also applies — and this too can be transferred between spouses:
| Allowance | Per person | Couple (combined) |
|---|---|---|
| Nil Rate Band | £325,000 | £650,000 |
| Residence Nil Rate Band | £175,000 | £350,000 |
| Total | £500,000 | £1,000,000 |
Does the First Death Affect the Transfer?
Only the unused percentage transfers — not a fixed amount. If the first spouse to die used 50% of their NRB (e.g. leaving £162,500 to children and the rest to their spouse), only 50% transfers. The survivor benefits from £325,000 + 50% of £325,000 = £487,500.
No Automatic Application
The transfer does not happen automatically. Executors of the surviving spouse’s estate must claim the transferred nil rate band from HMRC on the IHT400 form, providing evidence of the first death and the unused proportion.
Sources & references
- HMRC — Inheritance Tax
- Inheritance Tax Act 1984
- HMRC — How Inheritance Tax works: thresholds
- HMRC — Pass on your home (residence nil-rate band)
Authoritative UK government, HMRC, statute and Citizens Advice sources. Last reviewed: 31 May 2026.
Make Sure Your Will Uses Every Available Threshold
A Will structured to use all IHT thresholds can save your family hundreds of thousands of pounds. From £89.
Start Estate Planning →