Married couples and civil partners are allowed to pass their estate to their spouse tax-free when they die. Now to get down to business: the inheritance tax (IHT) threshold for married couples in the 2020/21 tax year is £650,000, providing the first person to pass away leaves all of their assets to their surviving spouse. Find the right Inheritance Tax and probate forms, Read more about Inheritance Tax and the probate process. Everyone’s (well, nearly all UK domiciled folk) estate is exempt from Inheritance Tax up to a certain threshold: £325,000  at present. A legacy to a pilot trust or trusts already set up in your lifetime (beneficial where both you and your new spouse have unused nil rate bands from deceased spouses). The Probate Department (Brokers) Ltd 03 300 102 300 Help & Savings, Pre Death Planning Saves Stress and Money, Letters of Administration England and Wales, HM Courts and Tribunals Service – Probate, Probate Registry Delays – Updated Regularly, Transferable Nil Rate Band of Inheritance Tax, Terms and Conditions of Business & Privacy Policy. It will take only 2 minutes to fill in. Their estate can be worth up to £650,000 before their death causes an Inheritance Tax liability. To see examples of how the unused nil rate band can be transferred follow the link below. We suspected that this may not be the case as back in 2007 the law was changed, and Inheritance Tax allowances became transferable between spouses. How to make the claim for The Transferable Nil Rate Band. Best saving to date is 94%. In other words, the surviving spouse can inherit the entire estate without having to pay Inheritance Tax (IHT). Check how the new Brexit rules affect you. Claim to transfer unused nil rate band Schedule IHT402 Name of deceased (person who has died now) Date of death DD MM YYYY Inheritance Tax reference number (if known) When to use this form Fill in this form if: • the deceased died on or after 9 October 2007 • their spouse or civil partner died before them The higher-earning spouse, who must be a basic-rate taxpayer, will then receive a tax credit equivalent to the amount of personal allowance that has been transferred to them. Doubling up the relief rate in this way means that married couples and registered civil … This file may not be suitable for users of assistive technology. Downloading Adobe Reader is free. Worked examples of transferring an unused Inheritance Tax threshold, See Inheritance Tax thresholds over the years. In some cases your partner may ask to stop getting your allowance. Doubling up the allowance means a married couple or registered civil partnership can pass on £650,000 tax … All content is available under the Open Government Licence v3.0, except where otherwise stated, If you use assistive technology (such as a screen reader) and need a the estate doesn’t qualify as an ‘excepted estate’. Married couples and those in civil partnerships can now register for a tax break, which could help them save up to £212 a year. This is known as spouse or civil partner exemption. A formal claim process is in place when the surviving spouse dies and not when the first spouse dies. However, the publication is written in general terms for information purposes only and in no way constitutes specific advice. It isn’t the unused amount of the first spouse or civil partner’s nil rate band that determines what you can transfer but the unused percentage becomes the transferable nil rate band. You may also need to establish whether any of the assets that the first spouse left could have qualified for Business or Agricultural Property Relief. It's possible to transfer any unused percentage of the inheritance tax nil rate band from a deceased spouse or civil partner to the surviving spouse or civil partner. Spouses and Inheritance Tax Allowances. It will run to the end of the financial tax year (April 5th) if the transfer of tax allowance to a spouse stops. The forms you’ll need to fill in depends on the following: If 100 percent of the unused threshold is being transferred and the value of the estate is less than twice the threshold when the second spouse or civil partner dies (£650,000 in 2011-21) the estate may be classed as an ‘excepted estate’. a copy of any ‘deed of variation’ if one was used to vary (or change) the will. There is no limit to the value of the estate that can be passed on tax-free to a spouse. Transferring unused allowances between spouses It is possible to transfer unused RNRBs between spouses. To help us improve GOV.UK, we’d like to know more about your visit today. If you are married it is possible upon death that the allowance will be transferred over to your spouse: to do this the executors of the estate will need to complete certain forms to transfer the nil rate band (that's the £325,000 allowance) from one person to another. You can change your cookie settings at any time. It doesn’t matter when the first spouse or civil partner died. HMRC would backdate the status change to the start of the tax year that you started transferring it. This allowance is also only valid on a main residence, so doesn’t include buy-to-let properties. We use cookies to collect information about how you use GOV.UK. Example: Husband dies leaving all his assets to his spouse. HMRC calls this ‘transferring the nil rate band’ from one partner to another. The reason for this change is spouses can and do transfer their estates to each other on death completely free of any inheritance tax. No responsibility can be taken for any errors contained A deceased person's unused Inheritance Tax threshold may be added to their spouse or civil partner's when they die It may be possible to increase a person’s threshold. Don’t include personal or financial information like your National Insurance number or credit card details. If it was all left to the surviving spouse or civil partner, 100 percent of the threshold was unused.