Inheritance Tax When the Second Parent Dies: Allowances, Examples & Executor Checklist

Last Updated On – 28-09-2026

When the second parent dies, Inheritance Tax (IHT) is calculated on that parent’s estate, but unused tax allowances from a deceased spouse or civil partner can make a major difference to the final bill.

For the 2026/27 tax year, the standard nil-rate band is £325,000 and the residence nil-rate band is £175,000.

Where the first spouse or civil partner did not use these allowances, qualifying estates can potentially have up to £650,000 of combined nil-rate bands plus £350,000 of combined residence nil-rate bands available on the second death.

That is where the often-quoted £1 million tax-free inheritance threshold for couples comes from. It is not an automatic £1 million allowance for every family.

The residence rules, the value of the estate, who inherits the home and how much of the first spouse’s allowances were previously used all matter.

What Happens to Inheritance Tax When the Second Parent Dies?

The expression “second parent” is useful for families, but it is not a special category in UK tax law. What matters is whether the parents were married or in a civil partnership.

Assets passing between spouses or civil partners are normally exempt from IHT. Consequently, when the first parent dies and leaves most or all of the estate to the surviving spouse, relatively little of that parent’s nil-rate band may be used.

The unused percentage can potentially be transferred and claimed when the survivor dies.

The personal representatives of the second parent then value the estate, identify lifetime gifts and liabilities, determine which exemptions and reliefs apply, claim any transferable allowances and calculate any IHT due.

IHT is normally paid from the estate by the executors or administrators before the remaining assets are distributed. It is therefore misleading to say that children automatically become responsible for paying their parents’ IHT simply because they inherit.

Different rules can create liability for particular recipients, such as recipients of certain lifetime gifts, but in an ordinary estate the personal representatives deal with the estate’s IHT.

Unmarried couples do not receive the spouse or civil partner exemption and cannot transfer unused nil-rate bands between one another. Long-term cohabitation by itself does not create the same IHT treatment.

How Much Can Parents Leave Tax-Free When the Second Parent Dies?

There are two important allowances for an ordinary family estate.

Allowance	One Person	Potential Amount After Full Transfer From Spouse/Civil Partner
Nil-rate band	£325,000	£650,000
Residence nil-rate band	£175,000	£350,000
Potential total	£500,000	£1,000,000

The £1 million figure is conditional.

For the full residence nil-rate band to apply, there must generally be a qualifying residential interest passing to direct descendants. Children, grandchildren and certain other direct descendants can qualify, including adopted, foster and stepchildren under the RNRB rules.

The estate value also matters because RNRB starts tapering once the relevant estate exceeds £2 million.

The £325,000 nil-rate band does not require a house to be inherited.

How Does the Transferable Nil-Rate Band Work After the First Parent Dies?

The transferable nil-rate band is based on the percentage of the first spouse or civil partner’s allowance that remained unused, rather than simply transferring a fixed historical cash amount.

If the first parent left everything to their spouse and used none of the nil-rate band, 100% may normally be transferred. If only part remained unused, only that percentage transfers.

Where an IHT400 account is required, form IHT402 is used to claim the unused nil-rate band. The normal claim deadline is generally 24 months after the end of the month in which the surviving spouse or civil partner died, although HMRC has limited discretion to accept late claims.

Partial Use of the First Parent’s Allowance

Suppose the first parent used 50% of the nil-rate band available at their death.

The remaining 50% transfers as a percentage.

If the surviving parent later dies while the nil-rate band is £325,000, the estate could potentially receive:

Component	Amount
Survivor’s own 100% nil-rate band	£325,000
Transferred 50%	£162,500
Total basic nil-rate band	£487,500

This is why executors should locate records from the first death rather than automatically assuming that either £325,000 or £650,000 is available.

Multiple Marriages and Earlier Deaths

A surviving person who had more than one deceased spouse or civil partner can potentially claim unused percentages from more than one earlier estate. However, the transferred addition is capped at 100% of one nil-rate band, so the survivor cannot normally have more than twice the standard nil-rate band.

The residence allowance has another useful rule. An unused RNRB can potentially transfer even where the first spouse or civil partner died before the RNRB was introduced on 6 April 2017.

How Does the Residence Nil-Rate Band Work on the Second Death?

For 2026/27, the maximum RNRB is £175,000 per person. With a complete transfer from a deceased spouse or civil partner, as much as £350,000 could potentially be available.

The property does not necessarily have to be the same home that the couple originally occupied together, but the rules require a qualifying residential interest and inheritance by qualifying direct descendants.

Crucially, an estate worth more than £2 million does not immediately lose the whole RNRB.

Instead, the allowance is reduced by £1 for every £2 by which the estate exceeds £2 million.

For example, if the second parent’s estate is £2.2 million, the £200,000 excess reduces the available RNRB by £100,000.

Where a full transferred £350,000 RNRB would otherwise be available, it would be completely tapered away at an estate value of approximately £2.7 million.

HMRC calculates the estate for the taper before deducting exemptions and reliefs such as Business Relief or Agricultural Relief, which can make the taper particularly important for valuable business and farming estates.

If a parent downsized, sold or gave away a former home after 8 July 2015, the estate may still qualify for a downsizing addition where the relevant conditions are satisfied and other assets pass to direct descendants.

Form IHT435 is used for a RNRB claim, while IHT436 can be required to claim unused RNRB from a deceased spouse or civil partner.

How Much Inheritance Tax Could Be Due on the Second Death?

The following examples illustrate why the answer varies significantly according to the estate value and availability of RNRB.

They assume that the first parent was a spouse or civil partner, the full unused basic nil-rate band transferred, the home passes to direct descendants where RNRB is shown, and there are no complicating gifts, debts, exemptions or other reliefs.

Estate	Approximate IHT With Available RNRB	Approximate IHT Without RNRB	Why
£650,000	£0	£0	Full £650,000 combined basic nil-rate band covers estate
£850,000	£0	£80,000	With RNRB, allowances can reach £1m; without it, £200,000 is taxable
£1.2 million	£80,000	£220,000	Full £1m allowances leave £200,000 taxable; without RNRB, £550,000 is taxable
£2.8 million	£860,000	£860,000	Full transferred RNRB has been tapered away; £650,000 basic NRB remains

These are simplified examples at the standard 40% IHT rate. Actual calculations can change because of lifetime gifts, trusts, debts, business or agricultural property, charitable gifts and other exemptions.

An interactive calculator would be most useful immediately below this table because readers could enter the estate value, transferable percentage, qualifying home value, RNRB eligibility and any post-2027 pension value instead of relying solely on fixed examples.

How Does the £2 Million Residence Nil-Rate Band Taper Affect Large Estates?

The taper is frequently misunderstood.

The £2 million figure is a taper threshold, not a hard eligibility ceiling.

If an estate is £2.1 million, £50,000 of RNRB is lost.

At £2.4 million, £200,000 is lost.

Where the maximum £350,000 combined RNRB would have been available, an estate of approximately £2.7 million wipes it out completely.

Another important point is that substantial Business Relief or Agricultural Relief does not necessarily prevent the RNRB taper because the taper calculation looks at the estate before those reliefs are deducted.

That distinction is particularly important for family businesses and farms.

How Have Business Relief and Agricultural Relief Changed in 2026?

This is one of the biggest changes for business-owning families.

For deaths from 6 April 2026, 100% Agricultural Relief and Business Relief is limited to a combined £2.5 million allowance per individual. Qualifying value above that allowance generally receives 50% relief rather than 100%.

Unused allowance can transfer to a surviving spouse or civil partner. A couple can therefore potentially have up to £5 million of qualifying agricultural or business assets covered by the 100% relief allowance.

Importantly, where the first spouse or civil partner died before 6 April 2026, the full £2.5 million allowance can potentially be available for transfer, subject to the applicable conditions.

The reform is particularly relevant to second deaths because valuable family companies, farms and partnerships may have accumulated in the surviving parent’s estate.

There is also a specific change for certain shares traded on markets such as the Alternative Investment Market (AIM). Qualifying shares of this type now receive 50% Business Relief rather than 100%, even where the individual still has unused £2.5 million 100% relief allowance.

That means older estate plans based on AIM shares receiving full IHT relief should be reviewed.

For readers holding investments inside tax wrappers, the separate article on how ISAs are treated for inheritance tax explains why the ISA tax wrapper itself does not automatically remove its value from an estate for IHT purposes.

HMRC has also extended the ability to pay IHT attributable to qualifying Agricultural Relief and Business Relief assets through 10 annual interest-free instalments from 6 April 2026.

How Will Inherited Pensions Change From 6 April 2027?

The existing article’s treatment of pensions needs an important distinction between the rules applying now and those starting in 2027.

For deaths before 6 April 2027, many discretionary pension death benefits can still fall outside the estate for IHT purposes.

The often-mentioned age of 75 primarily affects the Income Tax treatment of certain inherited pension benefits; it is not a general rule determining whether a pension is subject to IHT.

For deaths on or after 6 April 2027, most unused pension funds and pension death benefits will be brought into the IHT regime. Personal representatives will generally become responsible for reporting the pension alongside the estate and dealing with the attributable IHT.

Death-in-service benefits from registered pension schemes are excluded from the new measure.

The legislation also tackles the practical problem of executors needing money to pay tax before pension benefits have been released.

Where IHT is reasonably expected, personal representatives will be able to instruct a pension scheme administrator to withhold up to 50% of relevant taxable benefits for up to 15 months.

There is also a direct-payment mechanism through which qualifying pension funds can be used to help meet IHT liabilities before the remaining pension benefit is released.

Consider a simplified example.

A parent dies with an £850,000 estate including a qualifying home, plus an unused £300,000 pension pot. Assume the estate has the full £1 million combined NRB and RNRB available.

For a death before 6 April 2027, if that pension remains outside the IHT estate, the £850,000 estate could be covered by the available allowances.

For a death from 6 April 2027, if the full £300,000 pension is brought into scope, the total becomes £1.15 million.

After £1 million of available allowances, £150,000 remains taxable, producing £60,000 of IHT at 40%.

That is deliberately simplified. Spouse exemption, the identity of the pension beneficiary, exempt pension benefits, lifetime gifts and the exact estate composition can alter the result.

How Can Executors Pay Inheritance Tax Before Probate?

This creates one of the biggest practical problems after a death: HMRC may require IHT to be paid before the grant is obtained, yet financial institutions may refuse to release assets until probate has been granted.

The IHT payment deadline is generally the end of the sixth month after the month in which the person died.

A death on 10 March, for example, normally gives a payment deadline of 30 September. Interest can start running after the deadline.

Direct Payment Scheme

HMRC’s Direct Payment Scheme can allow participating banks, building societies and certain investment providers to send money directly from the deceased’s accounts to HMRC before probate.

Form IHT423 is used for this process.

It can significantly reduce the cash-flow problem where the estate has enough liquid assets but the executors cannot yet withdraw them personally.

Where there is uncertainty about what can legally be done with a deceased person’s bank funds, it covers accessing money from a deceased person’s bank account.

Instalments and Estate Funding

Certain assets can qualify for IHT payment by 10 annual instalments, including some land, property and business assets.

Different interest rules apply depending on the asset, while qualifying agricultural and business property receives the expanded interest-free instalment treatment from April 2026.

Where the estate cannot release enough cash, executors sometimes consider commercial probate or IHT loans.

These are private financial products rather than an HMRC relief and can carry significant interest and fees, so their cost should be compared carefully with other payment options.

HMRC also has procedures for particular cases where tax cannot reasonably be paid before the grant.

Which Inheritance Tax Forms May Executors Need?

Not every estate requires a full IHT400.

If the estate qualifies as an excepted estate, much of the relevant information can instead be provided through the probate or confirmation process.

For deaths on or after 1 January 2022, form IHT205 is no longer the standard form for excepted estates. It applies to older deaths, so an article dealing with current estates should not tell executors to use it automatically.

For an estate requiring a full account, commonly relevant forms include:

• IHT400 for the main inheritance tax account
• IHT402 for an unused transferable nil-rate band
• IHT403 for lifetime gifts
• IHT404 for jointly owned assets
• IHT435 for the residence nil-rate band
• IHT436 for transferred RNRB
• IHT437 for qualifying claims involving unused Agricultural Relief or Business Relief allowance from a deceased spouse or civil partner

Executors should use the version of each form current at the date the estate is reported because HMRC periodically updates the schedules.

Can a Deed of Variation Reduce Inheritance Tax After the Second Parent Dies?

A deed of variation can allow a beneficiary to redirect part or all of an inheritance after a death.

For example, an adult child may decide that assets should instead pass directly to grandchildren, another family member, a trust or a charity.

For the variation to receive the intended retrospective IHT or Capital Gains Tax treatment, it generally needs to be completed within two years of the death and contain the appropriate tax statement.

Where the statutory requirements are met, the variation can be treated for IHT and CGT purposes as though the deceased had made the altered disposition.

The treatment should not be confused with Income Tax. The statutory read-back treatment for a qualifying variation does not generally rewrite the past for Income Tax purposes.

A deed of variation can therefore be useful, but it should not be signed simply because a family assumes it will save tax.

It can affect ownership, CGT, trusts, benefit entitlement and future estate planning, so substantial variations merit professional advice.

Can Gifts Made Before Death Reduce Inheritance Tax?

Lifetime gifts can reduce an estate, but the rules are considerably more detailed than simply “give the money away seven years before death”.

One useful but sometimes overlooked exemption is normal expenditure out of income.

There is no fixed cash ceiling for this exemption.

Broadly, the gifts need to form part of the person’s normal expenditure, be made out of income rather than capital and leave the donor with sufficient income to maintain their usual standard of living.

A strong paper trail is important.

Families should retain evidence of income, routine expenditure, bank transfers, recipients and the pattern of gifts so that executors can support a claim later.

A gift with reservation of benefit is different.

If a parent gives a house to the children but continues living there rent-free, the property can remain within the parent’s estate for IHT despite legal ownership having changed.

Executors must also identify relevant lifetime gifts when completing the IHT account rather than assuming that assets are irrelevant simply because they left the deceased’s name before death.

Can Charitable Gifts Reduce the Inheritance Tax Rate?

Yes, but the often-quoted 10% charity test is commonly described incorrectly.

The reduced 36% IHT rate can apply where the qualifying charitable donation is at least 10% of the relevant baseline amount under the statutory calculation.

It is not simply 10% of the deceased’s gross estate.

For a simplified illustration, assume an estate of £1.2 million, no RNRB and a full £650,000 transferable basic nil-rate band.

Without a charitable gift, £550,000 would remain above the nil-rate band, producing £220,000 of IHT at 40%.

If £55,000 passes to charity and the estate consists of a single relevant component, the baseline amount can be £550,000.

The £55,000 gift meets the 10% test.

The remaining £495,000 chargeable amount would then be taxed at 36%, producing approximately £178,200 of IHT.

HMRC’s calculation becomes more complicated where the estate has different components, so executors should not apply a simple “10% of gross estate” rule.

What Common Mistakes Can Increase Inheritance Tax After the Second Parent Dies?

Several mistakes repeatedly create unnecessary tax, delays or HMRC enquiries:

• Failing to claim transferred allowances: executors should not assume HMRC will automatically apply the first spouse’s unused NRB or RNRB.
• Treating £2 million as an RNRB cliff edge: the residence allowance tapers by £1 for every £2 above £2 million rather than disappearing immediately.
• Ignoring previous gifts: lifetime gifts and gifts with reservation can materially change the estate calculation.
• Assuming jointly owned property is outside IHT: a deceased person’s beneficial interest in jointly owned assets can still form part of the IHT estate even where legal ownership passes automatically by survivorship.
• Using outdated Business Relief assumptions: the £2.5 million 100% relief cap and new 50% AIM treatment apply from 6 April 2026.
• Confusing pension Income Tax with IHT: the age-75 pension rules are not the same thing as the new 6 April 2027 IHT reform.
• Losing evidence from the first death: wills, probate papers, gift records and earlier IHT calculations can be essential when calculating transferable percentages.
• Relying on mirror wills without reviewing blended-family consequences: remarriage, stepchildren and later will changes can alter where assets ultimately pass.

What Taxes Can Beneficiaries Face After Receiving an Inheritance?

Receiving an inheritance does not normally create a new IHT charge on the beneficiary personally.

IHT is primarily calculated on the deceased’s estate.

However, later tax consequences can arise.

If a beneficiary inherits a property or investment and later sells it for more than its relevant probate value, Capital Gains Tax may be due on the post-death increase in value.

The date-of-death market value generally becomes the beneficiary’s acquisition value for CGT purposes rather than the parent’s original purchase price.

The estate itself can also incur CGT if executors sell assets during the administration period after they have increased in value.

Income generated by inherited assets after death can also be taxable even though the inheritance itself is not Income Tax.

ISAs require particular care because their IHT treatment is separate from their Income Tax and CGT advantages.

The value of an ISA does not simply disappear from the estate because the investment was held inside an ISA wrapper.

What Happens If the Will or Ownership of the Estate Is Disputed?

Executors should be cautious about distributing an estate while a material dispute remains unresolved.

Potential disputes can concern the validity of the will, claims under family-provision legislation, beneficial ownership of property, lifetime gifts, business ownership or whether an asset was genuinely owned by the deceased.

Tax deadlines can continue to run while a dispute is being resolved.

A contentious estate can therefore require both probate advice and tax advice rather than treating the dispute and the IHT account as separate problems.

Where joint ownership is disputed, the IHT position depends on the deceased’s actual beneficial entitlement, not merely whose name appeared on an account or title.

What Changes If the Estate Has Overseas Assets or Is in Scotland or Northern Ireland?

Inheritance Tax is a UK tax, but estate administration differs between jurisdictions.

In Scotland, the equivalent of obtaining probate is generally known as obtaining confirmation. Different Scottish forms and court procedures apply.

Northern Ireland also has separate probate procedures.

Cross-border estates need further attention because the UK changed its international IHT framework from 6 April 2025.

Long-term UK residence is now central to determining when non-UK property comes within the UK IHT regime.

That means an executor should not assume that an overseas bank account, property or investment can be ignored merely because the asset is outside the UK.

Double-taxation treaties and foreign estate taxes may also become relevant.

What Should Executors Do During the First 12 Months After the Second Parent Dies?

A practical order of work can prevent expensive mistakes.

Stage	Main Actions
Immediately after death	Register the death, locate the latest will, identify executors, secure property and notify relevant financial institutions
Early estate investigation	List property, savings, investments, businesses, pensions, debts, jointly owned assets and lifetime gifts
Review the first parent’s estate	Obtain the earlier will, grant, IHT calculations and evidence showing how much NRB/RNRB was used
Value the estate	Obtain defensible date-of-death values and identify any business/agricultural property or overseas assets
Establish IHT treatment	Check transferred NRB, RNRB, taper, gifts, charity exemption, BR/APR and pension treatment
Before the grant	Decide whether the estate is excepted or requires IHT400; arrange Direct Payment, instalments or other funding if tax is payable
IHT deadline	Normally pay tax due by the end of the sixth month after the month of death
Probate/confirmation	Apply for the relevant grant once the necessary IHT steps have been completed
Estate administration	Collect assets, settle liabilities, deal with estate Income Tax/CGT and make distributions when appropriate
Within two years	Consider deadlines for transferred NRB/RNRB claims and any deed of variation

Executors should keep the underlying records even after the estate has been distributed, particularly where valuations, gifts, reliefs or transferred allowances were material.

How Can Families Plan Before the Second Parent Dies?

Good IHT planning is normally less about finding one loophole and more about ensuring that existing allowances and reliefs are not accidentally lost.

For an ordinary family estate, the surviving parent’s will, ownership of the home, lifetime gifts and intended beneficiaries should be reviewed together.

Business owners and farmers now need to model the post-April 2026 £2.5 million BR/APR allowance, including whether an unused allowance is expected to transfer from the first spouse.

Families with substantial pension wealth should also reassess plans before the 6 April 2027 pension reform, because a pension strategy based on the assumption that unused pension wealth will always remain outside IHT may no longer produce the expected outcome.

Charitable giving, regular gifts from surplus income and appropriately structured lifetime gifts may help in suitable circumstances, but tax should not be considered in isolation from the donor’s future income, care costs, housing requirements and control of assets.

FAQs About Inheritance Tax When the Second Parent Dies

Who Pays Inheritance Tax When the Second Parent Dies?

The personal representatives normally calculate and pay IHT from the estate before distributing the remaining inheritance. Specific assets or gifts can create separate liabilities in some cases.

Can Parents Really Leave £1 Million Without Inheritance Tax?

Potentially. A married couple or civil partnership can reach £1 million where both £325,000 nil-rate bands and both £175,000 residence nil-rate bands are available and all RNRB conditions are satisfied.

Do Children Pay Inheritance Tax When They Inherit Their Parents’ House?

Usually the estate deals with IHT before distribution. Whether tax is due depends on the entire estate, available allowances, previous gifts and whether the home qualifies for RNRB.

Does an Estate Lose the Residence Nil-Rate Band as Soon as It Exceeds £2 Million?

No. The RNRB is reduced by £1 for every £2 above the £2 million taper threshold. A full £350,000 combined RNRB is therefore completely lost at approximately £2.7 million.

What Happens If the First Parent Used Some of Their Inheritance Tax Allowance?

Only the unused percentage normally transfers. For example, 50% unused would increase the survivor’s basic NRB to 150% of the prevailing individual allowance.

Are Pensions Outside Inheritance Tax?

Many discretionary pension death benefits remain outside IHT under the rules applying before 6 April 2027. From deaths on or after that date, most unused pension funds and death benefits will come within the new IHT regime.

How Long Do Executors Have to Pay Inheritance Tax?

The normal deadline is the end of the sixth month after the month of death. For a March death, that generally means 30 September.

Can an Inheritance Be Redirected After a Parent Dies?

A deed of variation may redirect an inheritance and can receive retrospective IHT and CGT treatment where the statutory requirements are met, normally including completion within two years of death.

Can Unmarried Parents Transfer Their Unused Inheritance Tax Allowances?

No. Transferable nil-rate bands are available between spouses and civil partners, not simply because two people lived together or had children together.