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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Basic principles: introduction

The ability to transfer nil rate band (TNRB) between the estates of married couples or civil partners was introduced in the FA08. The legislation relating to the transfer of unused nil rate band can be found in IHTA84/S8A-C.

The effect of TNRB is that when a surviving spouse or civil partner dies, the nil rate band in place at their death will be increased by the proportion of the nil rate band that was not used on the earlier death of their spouse or civil partner.

TNRB is available where the surviving spouse or civil partner dies on or after 9 October 2007. For married couples, the first death can have occurred at any time before or after that date. So the relief applies where the first death occurred under IHT, Capital Transfer Tax or Estate Duty and there was unused nil rate band.

For civil partners the first death must have occurred on or after 5 December 2005, the date the Civil Partnership Act became law in the United Kingdom. While it was possible to enter into a civil partnership in other countries before this date, the Act states that where a relationship was recognised under overseas law before the UK Act came into force, the parties to the relationship are to be treated as having formed a civil partnership recognised in the UK on the date the Act came into force.

Spouses or civil partners may leave a legacy in their Will that is equal to the nil rate band to chargeable beneficiaries or to a trust. It is important to read such clauses carefully to identify the amount that can pass under such a clause. There are some examples of the different wording that might be used and its effect at IHTM43065.