Guide
Inheritance tax when the second parent dies: the £1 million question
Updated
Nothing is usually payable when the first parent dies leaving everything to the survivor. The whole family's IHT bill is settled on the second death, against a threshold that can reach £1 million.
Why the first death is usually tax-free
Anything left to a spouse or civil partner is wholly exempt from IHT, whatever the amount. Because the first parent typically leaves everything to the survivor, no tax is due, and crucially, none of their £325,000 nil rate band or £175,000 residence band is used. Both transfer to the survivor's estate as percentages, claimed by the executors on the second death (gov.uk: transferring the threshold, forms IHT402 and IHT436).
The second-death arithmetic
| Line | Today | From April 2027 (+£300,000 pension) |
|---|---|---|
| Estate | £1,200,000 | £1,500,000 |
| Nil rate bands (2 × £325,000) | £650,000 | £650,000 |
| Residence bands (2 × £175,000) | £350,000 | £350,000 |
| Taxable | £200,000 | £500,000 |
| IHT at 40% | £80,000 | £200,000 |
The transferred bands mean the survivor's estate pays nothing up to £1 million (when a home worth at least £350,000 passes to direct descendants). Every pound above that is taxed at 40%, and from 6 April 2027 the survivor's unused pension counts toward it.
Points that catch families out
- The transfer must be claimed, executors file IHT402 (nil rate band) and IHT436 (residence band) within 2 years of the second death. It is not automatic.
- Remarriage, a survivor who remarries can still only stack bands to a maximum of one extra set (200% total).
- Unmarried couples get none of this, no exemption on the first death and no transferable bands: each partner has only their own £325,000 (+ RNRB if eligible).
- First-death gifts to children use up band, anything the first parent left to people other than the spouse reduces the percentage that transfers.
- The £2m taper, a large combined estate on the second death can lose some or all of the £350,000 residence band; pension inclusion from 2027 makes this more common.
Interest is charged on IHT paid late, the bill is normally due by the end of the sixth month after death, before probate is granted. Executors of pension-heavy estates should plan liquidity early.