An estate is exempt from Inheritance Tax if the deceased left everything to their husband, wife or civil partner, who lives permanently in the UK.
Married couples and civil partners can give any value of gifts to each other during their lifetime without Inheritance Tax being due on them.
This is known as ‘spouse or civil partner exemption’.
Transferring Inheritance Tax thresholds
If someone’s estate is less than the Inheritance Tax threshold of £325,000, the remaining threshold can be transferred to their husband, wife or civil partner’s estate when they die - even if they remarried.
This means the surviving partner’s estate can be worth up to £650,000 before any Inheritance Tax is due.
The transfer is made when the surviving husband, wife or civil partner dies and is done by the executor of their will or administrator of their estate when they work out how much it’s worth.
The rules for transferring a threshold are different if the:
- estate of the first spouse or civil partner qualified for relief on woodland or heritage assets
- surviving spouse or civil partner had an unsecured pension as the ‘relevant dependant’ of a person who died with an Alternatively Secured Pension
- first spouse or civil partner died before 1975
Contact the probate and Inheritance Tax helpline for more information about these exceptions.
The executor or administrator of the estate should give the surviving husband, wife or civil partner documents that show any unused Inheritance Tax threshold.
These will be needed to transfer the threshold to the surviving partner’s estate when they die.