How does transferring an unused nil-rate band work?
When the first of a married couple dies, any nil-rate band they did not use transfers to the survivor as a percentage rather than as an amount. A spouse who left everything to their partner used none of their band, so 100% transfers — and that is what takes a couple's threshold to £650,000, or £1 million once both residence bands are counted.
- The mechanism: the unused proportion of the first estate's band, applied to the band in force at the second death.
- The maximum: 100% where everything passed to the surviving spouse, giving £650,000 of nil-rate band.
- With residences: both residence bands can also transfer, taking the ceiling to £1 million.
- The catch: it is claimed by the personal representatives, and it is lost if nobody claims it.
01 Why it is a percentage, not an amount
The transfer works on proportions. If the first spouse used none of their band, 100% transfers; if they used half, 50% transfers. That percentage is then applied to the nil-rate band in force at the second death, not to the band in force when the first death occurred.
The consequence is favourable and often unrecognised. A spouse who died in 1998, when the band was much lower, having left everything to their partner, transfers 100% — worth £325,000 today. Anyone reasoning from the 1998 cash figure will understate the estate's threshold substantially.
It also means that a modest legacy at the first death can be expensive later. A £30,000 gift to a nephew from an estate with a £300,000 band used 10% of it, and that 10% is permanently unavailable at the second death.
Shows: the combined threshold available at the second death from the percentage of band transferred. Ignores: the residence band taper above £2 million, gifts in the seven years before death, and any relief on business or agricultural property.
On the defaults above, the worked example shows £1,000,000. A 100% transfer adds £325,000 to the survivor's own band, before the residence bands are counted.
Source: Inheritance Tax
02 The claim, and how it gets lost
The transfer is not automatic. Personal representatives claim it on form IHT402 within two years of the end of the month of the second death, supported by evidence from the first estate — the death certificate, the marriage certificate, the will and the grant.
That evidence is the problem. Where the first death was thirty years earlier, the paperwork may be gone, and reconstructing it is far harder than keeping it. Anyone who has been widowed should keep the first estate's documents with their own will rather than filed away or discarded.
The same applies to the residence band, claimed on its own form. A couple can transfer both, and both are lost the same way — by nobody knowing they existed.
Source: Applying for probate
03 What it means while you are both alive
The transferability of the band is why simple mirror wills leaving everything to each other are usually efficient for Inheritance Tax. The old practice of nil-rate band discretionary trusts on the first death existed to preserve a band that would otherwise have been wasted, and transferability removed the need for it in 2007.
Those trusts still appear in wills written before then, and they can now cost more than they save — particularly where they interfere with the residence nil-rate band, which requires the home to pass to direct descendants.
For unmarried couples none of this is available. There is no transfer between cohabitants, no spousal exemption on the first death, and no route to the £1 million figure, which is the single largest financial difference marriage makes in UK law.
Source: Wills, probate and inheritance
If you have been widowed, go and find the paperwork from your spouse's estate and put it with your will. That is the whole of my advice on this, and it is worth up to £130,000 of tax. The percentage transfers, so a death in the eighties or nineties is worth today's band rather than the band of the time — which almost nobody expects. What loses it is not a rule; it is a box of documents nobody kept and executors who did not know to ask.
FAQ
Does the transfer happen automatically?
No. Personal representatives claim it on form IHT402 within two years of the end of the month of the second death, with evidence from the first estate. An unclaimed transfer is simply lost.
What if my spouse died decades ago?
The transfer is a percentage, so it is applied to the band in force at your death rather than the one that applied then. A spouse who died in the 1990s leaving everything to you transfers 100%, worth the full current band.
Can unmarried partners transfer a band?
No. There is no transfer between cohabitants and no spousal exemption on the first death, which means an unmarried couple cannot reach the combined thresholds available to a married one.
Sources
Regulator references
- Inheritance Tax · GOV.UK · 2025The nil-rate band, the 40% rate and what forms part of the estate.Last verified: 2026-09-07
- Applying for probate · GOV.UK · 2025The grant process that decides how quickly an estate can be settled.Last verified: 2026-09-07
- Wills, probate and inheritance · GOV.UK · 2025The intestacy rules that apply when no valid will exists.Last verified: 2026-09-07
Calculator unit tests · the assertions this page's worked example is checked against, and their last result
Changelog
- 2026-09-07 — initial publish (new format)
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Jordan Reeves
Founder of Talk Through Wealth. A software engineer for over a decade before turning to retirement planning, Jordan built the projection engine after watching family members get fragmented, country-by-country advice that never reconciled. He writes about retirement the way the engine computes it: month-by-month, lifetime-long, and skeptical of any rule of thumb that hasn't been run through the math.