The nil-rate band explained
The nil-rate band is the first £325,000 of your estate, taxed at 0%. Everyone gets one, and married couples can effectively use two.
The short answer
- Every person has a nil-rate band of £325,000, taxed at 0%.
- Anything above the available allowances is taxed at 40%.
- Unused nil-rate band transfers to a surviving spouse or civil partner, giving up to £650,000 on the second death.
- The transfer is not automatic — executors must claim it, using form IHT402, within two years of the second death.
- The band has been frozen for years, which is why more estates are caught each year without any rule changing.
What's on this page
What it is#
The nil-rate band is the slice of an estate charged at 0% inheritance tax. It is currently £325,000, it applies to everyone, and it does not depend on what you own or who you leave it to.
Above it — after any other allowances and exemptions — the rate is 40%.
An estate of £500,000, single person, no home passing to descendants.
£500,000 − £325,000 = £175,000 taxable.
£175,000 × 40% = £70,000 inheritance tax.
The transferable nil-rate band#
Anything left to a spouse or civil partner is exempt from inheritance tax. So when the first partner dies leaving everything to the survivor, none of their nil-rate band is used — and the unused percentage transfers.
It transfers as a percentage, not a cash amount, which matters. If the first death used none of the band, 100% transfers, and the survivor's estate gets 100% of the nil-rate band at the rate applying when they die. If the band rises in the meantime, the transferred amount rises with it.
Harold dies leaving everything to Joan. He used 0% of his band, so 100% transfers.
Joan dies later with an estate of £800,000.
Her allowance: £325,000 + £325,000 = £650,000.
£800,000 − £650,000 = £150,000 taxable → £60,000 tax. Add the residence allowances and the position improves again.
It has to be claimed#
The transferred band is not applied automatically. The executors of the second estate must claim it on form IHT402, normally within two years of the second death. That means keeping the first partner's death certificate, marriage certificate, will and grant of probate — sometimes for decades. Families who cannot produce them make the claim much harder.
Where it applies partially#
If the first partner left some of their estate to people other than the spouse — say £81,250 to their children — that uses 25% of their band, and only 75% transfers.
Widows and widowers can also claim from a previous spouse. If someone has been widowed more than once, bands can be claimed from more than one late spouse, though the total is capped at 100% of one additional band.
Why the freeze matters#
The nil-rate band has been held at £325,000 for years and is currently set to remain frozen until April 2030. House prices have not been frozen. The practical effect is a tax rise that is never announced: each year, more ordinary estates cross the line without anyone changing a rule.
If your estate is near the threshold and your home is still appreciating, assume you will be closer next year, not further away.
What sits alongside it#
- Residence nil-rate band — up to £175,000 more per person if a home passes to direct descendants.
- Spouse exemption — unlimited, for anything left to a husband, wife or civil partner.
- Charity exemption — unlimited; and leaving 10% of the net estate cuts the rate on the rest to 36%.
- Gifting allowances — £3,000 a year, plus the 7 years-year rule on larger gifts.
Together, a couple leaving a home to children can reach £1,000,000. Try your own figures in the calculator.
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Frequently asked questions
Is the nil-rate band per person or per estate?
Per person. Each individual has their own £325,000. A married couple therefore has £650,000 between them, provided the unused portion is claimed on the second death.
Do unmarried couples get the transferable band?
No. Transfer is only available between spouses and civil partners. Two people who lived together for decades each have a single band, and nothing passes between them — which is one of the strongest financial arguments for marriage or civil partnership in UK law.
What if my late spouse died many years ago?
The claim can still be made, and it is based on the percentage of their band that went unused, applied to the band in force when the survivor dies. You will need the death certificate, marriage certificate, and ideally the will and grant of probate. Dig them out and keep them somewhere your executors will find them.
Does the nil-rate band apply to gifts made during my lifetime?
Yes. Gifts made within 7 years years of death are set against the nil-rate band first, which can reduce or exhaust what remains for the estate itself. This is why large late gifts sometimes achieve less than people expect.
This is general information, not legal advice. Everyone's situation is different — speak to a qualified adviser before acting. KeepTheLot is an independent information service covering England & Wales. We are not a law firm.
Part of our guide to inheritance tax.