IHT Couple Calculator 2026/27: How Married Couples Get £1m IHT-Free
How married couples and civil partners combine two nil-rate bands and two residence bands in 2026/27, the £2m taper and worked IHT bills.
Combined couple allowance for 2026/27
Nil Rate Band
£650,000
2 × £325,000 - any assets, no conditions
Residence Nil Rate Band
£350,000
2 × £175,000 - home passing to direct descendants only
Combined headline allowance
£1,000,000
Full amount needs a home worth at least £350,000 passing to direct descendants and an estate not above £2,000,000
6 worked scenarios
Each row is the second death of a couple where the first spouse left everything to the survivor, so both bands transfer in full. Each assumes the home is worth at least £350,000 and that there were no lifetime gifts in the 7 years before death. The charity row tests the 10% condition against the baseline amount described in HMRC IHTM45009.
| Scenario | Estate | NRB | RNRB | To charity | Taxable | Rate | IHT |
|---|---|---|---|---|---|---|---|
| Family home to children Below the combined allowance. | £750,000 | £650,000 | £350,000 | £0 | £0 | 40% | £0 |
| Family home to children Exactly at the combined allowance. | £1,000,000 | £650,000 | £350,000 | £0 | £0 | 40% | £0 |
| Family home to children Above the combined allowance. | £1,500,000 | £650,000 | £350,000 | £0 | £500,000 | 40% | £200,000 |
| Estate above the taper threshold Part of the combined RNRB is lost to the £2,000,000 taper. | £2,200,000 | £650,000 | £250,000 | £0 | £1,300,000 | 40% | £520,000 |
| No direct descendants No residence nil-rate band without a direct descendant. | £1,000,000 | £650,000 | £0 | £0 | £350,000 | 40% | £140,000 |
| Charity legacy of 10% of the estate Clears the 10% baseline test, so the reduced rate applies. | £1,500,000 | £650,000 | £350,000 | £150,000 | £350,000 | 36% | £126,000 |
How the £1m headline works
- First death: everything left to the surviving spouse or civil partner is normally exempt (IHTA 1984 s.18), so no Inheritance Tax is due and the £325,000 nil-rate band and £175,000 residence band go unused.
- Transfer: the unused percentage of each band is added to the survivor's own (IHTA 1984 s.8A; ss.8E-8G). Because it is a percentage, it is applied to the band in force at the second death.
- Second death: the survivor's estate has £325,000 own plus £325,000 transferred nil-rate band (£650,000), and £175,000 own plus £175,000 transferred residence band (£350,000) if the conditions are met.
- Claim: the survivor's personal representatives claim the transferred bands on IHT402 and IHT436, within 2 years from the end of the month of death or 3 months from when they start to act if later (IHTA 1984 s.8B).
- Result: up to £1,000,000 is taxed at nil; the rest at 40%, or 36% if the charity condition is met.
The £2,000,000 taper trap
Estates above £2,000,000 lose £1 of residence nil-rate band for every £2 above the threshold, an effective 60% marginal rate while the band is tapering. The test uses the estate after debts but before exemptions and reliefs, so charity and spouse legacies do not reduce it (GOV.UK).
| Combined estate | Combined RNRB available | Total allowance | % of full RNRB |
|---|---|---|---|
| £2,000,000 | £350,000 | £1,000,000 | 100% |
| £2,100,000 | £300,000 | £950,000 | 86% |
| £2,200,000 | £250,000 | £900,000 | 71% |
| £2,350,000 | £175,000 | £825,000 | 50% |
| £2,500,000 | £100,000 | £750,000 | 29% |
| £2,700,000 | £0 | £650,000 | 0% |
April 2027 pension change
For deaths on or after 6 April 2027, Finance Act 2026 (sections 66 to 71) brings most unused pension funds and pension death benefits into the estate. Death-in-service lump sums and some dependants' scheme pensions are excluded, and pension benefits left to a spouse or civil partner still get the spouse exemption.
Illustration: £800,000 of unused pension funds within scope at the second death, alongside £900,000 of other assets, makes an estate of £1,700,000. With the full £1,000,000 allowance, the tax is £280,000; under the 2026/27 rules the pension funds would be outside the estate. See our UK IHT rules guide and inheritance tax calculator for the April 2027 detail.
Related IHT tools and guides
- Inheritance Tax calculator - interactive IHT calc for any estate.
- IHT gift taper calculator - 7-year rule and taper on lifetime gifts.
- RNRB calculator - residence nil rate band detail including downsizing.
- UK Inheritance Tax rules guide - NRB, RNRB, BPR/APR cap, pension IHT 2027.
- BPR & APR April 2026 changes - £2.5m allowance for 100% relief, transferable.
- BPR / APR allowance calculator - interactive £2.5m allowance modelling including a transferred spousal allowance.
- Pension IHT calculator (April 2027) - DC pension pot IHT exposure projection.
- Marriage Allowance guide - related transferable allowance (income tax).
- Family Investment Companies - alphabet shares, gift vs loan IHT planning.
- UK trust tax - RPT periodic charges, discretionary trust planning.
Frequently asked questions
How can a married couple pass £1 million free of inheritance tax?
Each spouse or civil partner has a £325,000 nil-rate band and, if a home goes to direct descendants, a £175,000 residence nil-rate band. Anything left to a spouse or civil partner is normally exempt (IHTA 1984 s.18), so on the first death the bands can go unused. The unused percentage of each band is then added to the survivor's own bands (IHTA 1984 s.8A for the nil-rate band, ss.8E-8G for the residence band). At the second death that gives up to £650,000 plus £350,000, a total of £1,000,000. The residence part only applies in full if the home is worth at least £350,000, passes to direct descendants and the estate is not above the £2,000,000 taper threshold.
What are the conditions for the residence nil-rate band?
The person who died must have owned a home they lived in at some point, and it (or its value) must pass to direct descendants: children, grandchildren and other lineal descendants, step-children, adopted and foster children, and the spouses or civil partners of any of these (including widows and widowers). Nephews, nieces and siblings do not count. The band cannot be more than the value of the home passed on. It tapers away by £1 for every £2 the estate is above £2,000,000, so one person's band is gone at £2,350,000 and a couple's combined band at £2,700,000 (GOV.UK residence nil rate band guidance; IHTA 1984 s.8D).
What happens to the RNRB if my estate is over 2 million pounds?
The residence nil-rate band falls by £1 for every £2 of estate above £2,000,000. For a couple with the full £350,000: an estate of £2,000,000 keeps £350,000, £2,100,000 keeps £300,000, £2,200,000 keeps £250,000, £2,350,000 keeps £175,000, £2,500,000 keeps £100,000, £2,700,000 keeps £0. While the band is tapering, each extra £2 of estate costs £0.80 of tax on itself plus £0.40 from the lost band, an effective 60% rate. The estate value for this test is after debts but before reliefs and exemptions, so leaving money to charity or a spouse, or holding assets that qualify for business or agricultural relief, does not reduce it (GOV.UK residence nil rate band guidance). Lifetime gifts that the giver survives by 7 years do reduce it.
How does IHT work for a couple with a 1.5 million pound estate leaving the home to children?
On the first death everything passes to the survivor and is exempt, so both bands transfer in full. At the second death the estate of £1,500,000 has £650,000 of nil-rate band and £350,000 of residence band (assuming the home is worth at least that), leaving £500,000 taxable at 40%: £200,000. The executors claim the transferred bands on forms IHT402 and IHT436 with the IHT400. The tax is due by the end of the sixth month after the death; tax on land and buildings can usually be paid in 10 yearly instalments, with interest (GOV.UK Pay your Inheritance Tax bill).
Does it matter when the first spouse died?
For the nil-rate band, the survivor must die on or after 9 October 2007. For married couples the first death can have been at any time, including under the earlier Capital Transfer Tax or Estate Duty rules; for civil partners it must have been on or after 5 December 2005 (HMRC IHTM43001). For the residence nil-rate band, the survivor must die on or after 6 April 2017. If the first spouse died before that date, their residence band is treated as unused, but it can still be reduced if their own estate was above the £2 million taper threshold (HMRC IHTM46044). Claims are made by the personal representatives within 2 years from the end of the month of the survivor's death, or 3 months from when they start to act if later (IHTA 1984 s.8B; HMRC IHTM46042).
What if we are not married but living together?
Unmarried partners get neither the spouse exemption nor any transfer of unused bands, however long they have lived together. A partner is also not a direct descendant, so leaving the home to a partner does not attract the residence nil-rate band. Example: one partner leaves a £600,000 estate to the other. Only the £325,000 nil-rate band applies, so £275,000 is taxed at 40%: £110,000. Between spouses or civil partners the same transfer is normally exempt. The spouse exemption is limited to £325,000 where the person giving is a long-term UK resident and their spouse is not (IHTA 1984 s.18(2)).
How are pensions treated for Inheritance Tax from April 2027?
Finance Act 2026 (sections 66 to 71) brings most unused pension funds and pension death benefits into the estate for deaths on or after 6 April 2027. Pension benefits left to a spouse or civil partner still get the spouse exemption, and death-in-service lump sums and some dependants' scheme pensions are excluded. For a couple this mainly matters at the second death. Illustration: if £800,000 of unused pension funds are within scope at the second death alongside £900,000 of other assets, the estate becomes £1,700,000; with the full £1,000,000 combined allowance, £700,000 is taxable at 40%, which is £280,000. Under the 2026/27 rules the pension funds would sit outside the estate.
What is the difference between Nil Rate Band and Residence Nil Rate Band?
The nil-rate band (£325,000) applies to any assets, with no conditions; it has been £325,000 since 6 April 2009 and is frozen to April 2031. The residence nil-rate band (£175,000 since 6 April 2020) was introduced from 6 April 2017 by Finance (No. 2) Act 2015 s.9, which inserted ss.8D-8M into IHTA 1984. It only applies where a home passes to direct descendants, is capped at the home's value and tapers above £2,000,000. Both bands can be transferred to a surviving spouse or civil partner.
What if our home is worth less than the residence nil-rate band?
The residence nil-rate band cannot be more than the value of the home passed to direct descendants. If a home worth £100,000 goes to a child, only £100,000 of the band is used, and the rest cannot be set against other assets. If that death was the first death and the rest went to the spouse, the unused part transfers to the survivor (GOV.UK residence nil rate band guidance). If someone downsized to a cheaper home, or sold or gave away their home, on or after 8 July 2015, a "downsizing addition" can make up some of the lost band, provided other assets of equal value pass to direct descendants (IHTA 1984 ss.8FA-8FE; GOV.UK downsizing guidance).
How does the 36% charity reduced rate interact with the couple allowance?
If at least 10% of the "baseline amount" goes to charity, tax on the rest of the estate is charged at 36% instead of 40% (IHTA 1984 Sch 1A). The baseline amount is the estate after the nil-rate band (including any transferred band) with the charity gift added back. The residence nil-rate band is not deducted when working it out (HMRC IHTM45009). For a £1,500,000 estate with both bands transferred, the baseline is £850,000, so the charity gift must be at least £85,000. A £50,000 gift falls short: tax is £180,000 at 40%. A £150,000 gift qualifies: tax is £126,000 at 36%, against £200,000 with no charity gift.
How do we plan to maximise the couple allowance?
Points to check with a solicitor or adviser. (1) Wills: leaving everything to the survivor uses the spouse exemption and preserves both bands; some couples instead use a trust over a share of the home, for example where there are children from earlier relationships. (2) Records: keep the first spouse's will, the value of their estate and any IHT forms, because the executors of the survivor need them to claim the transferred bands. (3) Estate size: if the combined estate is near £2,000,000, lifetime gifts the giver survives by 7 years reduce the estate for the taper test; charity legacies and spouse gifts do not. (4) Pensions: from 6 April 2027 most unused pension funds count towards the estate. See our inheritance tax calculator, IHT gift taper calculator and RNRB calculator.
When do we need to file the IHT return and pay the tax?
If no tax is due and the estate is an excepted estate, for deaths from 1 January 2022 its estimated value is reported in the probate application if probate is needed, and not reported at all if it is not. A full IHT400 is needed if tax is due, or even if not where, for example, the estate is worth more than £3 million, the person gave away more than £250,000 in the 7 years before death, or had foreign assets worth more than £100,000; it is due within 12 months of the death (GOV.UK How to value an estate). The tax itself is due by the end of the sixth month after the death, and you usually need to pay some of it before getting probate (GOV.UK Pay your Inheritance Tax bill). Late payment interest is charged at Bank Rate plus 4 percentage points from 6 April 2025 (HMRC Inheritance Tax interest rates table).