What is the transferable nil-rate band between spouses?

What the Law Says

The transferable nil-rate band is a key feature of UK inheritance tax law that enables surviving spouses and civil partners to benefit from any unused portion of their deceased partner’s nil-rate band. It was introduced by amendment to the Inheritance Tax Act 1984 and applies automatically on the second death — no prior election is needed.

The nil-rate band is the amount of an estate that can be passed on free of inheritance tax. As of 2024, it remains frozen at £325,000 per person. When one spouse dies and does not use their full nil-rate band (e.g., because assets pass to the surviving spouse tax-free), the unused percentage can be transferred to the survivor.

This transfer is governed by section 8A of the Inheritance Tax Act 1984, which provides the legal basis for calculating and applying the unused portion. The transfer applies regardless of when the first spouse died — as long as the second death occurs on or after 9 October 2007, the date the rule came into force.

Importantly, the transfer is calculated as a percentage — not a fixed sum — so if the first spouse used only £162,500 of their £325,000 allowance (i.e., 50% used), then 50% remains available to transfer. That means the survivor’s allowance becomes £325,000 + 50% of £325,000 = £487,500.

Statutory Text

Where the deceased is survived by a husband or wife or civil partner, the general nil-rate band applicable to the transfer on the death of the deceased shall be increased by the percentage corresponding to the unused nil-rate band of the last deceased husband or wife or civil partner of the deceased.

— Inheritance Tax Act 1984, s. 8A — Transferable nil-rate band

What to Do

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