The spousal exemption is one of the most powerful reliefs in Inheritance Tax planning. Transfers between spouses and civil partners are generally free of Inheritance Tax, both during life and on death, making them a cornerstone of estate planning for couples.
How the Spousal Exemption Works
Assets passing between UK-domiciled spouses or civil partners are exempt without limit. This means the first death can often pass an entire estate to the survivor with no immediate Inheritance Tax charge, deferring any liability until the second death.
Transferable Nil-Rate Band
Beyond the spousal exemption, any unused nil-rate band on the first death can be transferred to the surviving spouse. This can effectively double the amount that passes tax-free on the second death, so claiming it correctly is important.
A Point to Watch
Where one spouse is not UK-domiciled, the exemption can be limited, although elections may be available. Couples in this position should take advice to avoid an unexpected charge.
How TaxDigit Can Help
Our Guildford-based team helps couples use the spousal exemption and nil-rate bands as part of a joined-up estate plan. Get in touch to protect your family’s wealth.
Spousal Exemption: UK-Wide IHT Support
The spousal exemption is central to Inheritance Tax planning for couples right across the United Kingdom, not just near our Guildford head office. TaxDigit helps married couples and civil partners UK-wide use this exemption and the transferable nil-rate band effectively.
Our chartered certified accountants help you combine the spousal exemption with other reliefs so that wealth passes to the next generation with as little Inheritance Tax as possible. We support clients UK-wide, both remotely and from our Guildford office.
While transfers between spouses are largely exempt, the bigger planning opportunity often lies in how the nil-rate bands are used across two estates. Leaving everything to a surviving spouse is simple, but without planning it can waste allowances or push a larger charge onto the second death. We model both estates together so the family’s overall position, not just the first transfer, is optimised.
How we help with the spousal exemption
- Applying the spousal exemption on lifetime gifts and on death
- Using the transferable nil-rate band between estates
- Coordinating the residence nil-rate band where a home is involved
- Reviewing wills alongside your accountant and solicitor
- Planning across both estates to reduce the overall Inheritance Tax bill
HMRC explains Inheritance Tax thresholds and allowances here: HMRC guidance on Inheritance Tax thresholds and allowances.
Frequently Asked Questions
What is the spousal exemption?
Transfers between spouses and civil partners are generally free of Inheritance Tax, both during life and on death, provided both are UK domiciled.
Can unused allowances pass to a surviving spouse?
Yes. Any unused nil-rate band can usually be transferred to a surviving spouse or civil partner, increasing the amount that passes tax-free on the second death.
Can TaxDigit help if I am not based in Guildford?
Yes. We advise on the spousal exemption and Inheritance Tax for clients UK-wide, remotely and from our Guildford office.