Inheritance Tax When the Second Parent Dies: The £1m Rule
Quick answer
The second death is when IHT really gets calculated. How both parents' nil-rate bands combine to £1 million, with worked examples and executor steps.
Quick answer: When the second parent dies, the estate can usually stack both parents' allowances: two nil-rate bands of £325,000, plus two residence nil-rate bands of £175,000 if the family home goes to children or grandchildren. That is up to £1 million passing tax-free for a married couple, with 40% only on the excess. But none of it is automatic: the executor must claim the transfers on specific forms, with paperwork that may be decades old, against a 6-month payment clock that starts at death. Married couples usually pay nothing on the first death and do the real calculation on the second; unmarried parents can face a six-figure bill the married family next door would never see. This guide walks through both, with real numbers.
All thresholds are 2026/27 figures, checked against GOV.UK on 27 July 2026.
Who this guide is for
| You are... | What matters most |
|---|---|
| An adult child whose surviving parent has just died | The executor sections: claiming both parents' allowances, the 6-month clock |
| The executor named in the will | Forms IHT400/402/436, valuation, and paying before probate |
| A surviving parent planning ahead | The paperwork file that will save your children weeks, and the gifting rules |
| Unmarried parents with property | The example below: why marriage/civil partnership changes the bill by £80,000+ |
| A family with an estate near £2 million | The RNRB taper that silently removes the home allowance |
| Worried but with a modest estate | Reassurance: most estates under £1m passing to children pay nothing |
Key facts
| Allowance | Amount | Condition |
|---|---|---|
| Nil-rate band (NRB) | £325,000 | Everyone has one |
| Transferred NRB from first parent | Up to £325,000 | Unused percentage transfers, claimed by the executor |
| Residence nil-rate band (RNRB) | £175,000 | Home (or downsizing proceeds) to direct descendants |
| Transferred RNRB | Up to £175,000 | Same claim principle |
| Maximum tax-free | £1,000,000 | Married/civil partners, home to children |
| Rate above allowances | 40% | 36% if 10%+ of the net estate goes to charity |
| RNRB taper | -£1 per £2 | Estates over £2m; RNRB gone entirely by £2.7m (with transfer) |
| Payment deadline | 6 months | From the end of the month of death; interest after |
How the second-death calculation works
- Value everything the second parent owned at death: property, savings, investments, contents, minus debts and funeral costs. Most defined-contribution pension pots sit outside the estate.
- Add back gifts made in the 7 years before death; these consume the nil-rate band first, oldest first.
- Apply the second parent's own £325,000, plus the transferred percentage of the first parent's NRB (usually 100%, because everything passed to the spouse tax-free).
- If the home passes to children, stepchildren, adopted children or grandchildren, add up to two £175,000 RNRBs, tapered if the estate tops £2 million.
- Tax the remainder at 40% (36% with the 10% charity route). Pay within 6 months of the end of the month of death; the property share can be paid in 10 annual instalments.
- Probate is only granted once the IHT position is settled or secured, which is why this runs first.
Real example 1: the Hughes family, £600,000 estate, zero tax
David Hughes died in 2013 leaving everything to his wife Margaret: no tax (spouse exemption), no allowances used. Margaret dies in June 2026 leaving a £350,000 house and £250,000 of savings equally to their two daughters:
| Item | Amount |
|---|---|
| Estate | £600,000 |
| Margaret's NRB + David's transferred NRB | £650,000 |
| RNRBs available (home to daughters) | £350,000 headroom on top |
| Inheritance tax | £0 |
The daughters still had to file the claim forms to use David's band. Do not skip the maths just because the answer looks like zero: the inheritance tax calculator confirms it in two minutes.
Real example 2: the Patels, £1.4 million estate
| Item | Amount |
|---|---|
| Estate (house £500,000 to children, plus investments and cash) | £1,400,000 |
| Two NRBs | -£650,000 |
| Two RNRBs | -£350,000 |
| Taxable | £400,000 |
| Tax at 40% | £160,000 |
| Effective rate on the whole estate | 11.4% |
Had their parents gifted £100,000 to the children eight years before the second death, the bill would have been £40,000 lower; gifts survived past the 7-year line fall out entirely. Planning while both parents are alive is worth multiples of anything an executor can do afterwards.
Real example 3: Sue and Alan, unmarried parents, the £80,000 difference
Sue and Alan lived together 30 years, never married, owned a £450,000 home and £250,000 savings, everything to each other then their son. Alan dies first leaving his half to Sue: no spouse exemption exists for cohabitees, so his £350,000 half-share uses £325,000 NRB + part of his RNRB, and crucially nothing transfers. When Sue dies, her £700,000 estate has only her own £325,000 + £175,000 = £500,000 of cover: £80,000 of tax their married neighbours would not pay. A marriage or civil partnership, even late in life, would have restored the full transferable £1 million. Unmarried couples with property must plan wills around this asymmetry, ideally with advice.
If this is you, do this (decision table)
| Situation | Meaning | Decision | Action |
|---|---|---|---|
| Second parent just died, you are executor | Clock running | Sequence the admin | Register death → value estate → IHT400 + claims → pay → probate |
| Estate clearly under £650,000, home to children | Almost certainly no tax | Simpler route | Most such estates qualify as "excepted": reduced reporting, no IHT400 |
| First parent's paperwork missing | Transfer claim harder, not lost | Reconstruct | Probate registry copies of old grants/wills; HMRC accepts reconstructed evidence |
| Estate over £2 million | RNRB tapering away | Get advice pre-death if possible | Pension and gifting strategies can pull the estate back under the taper |
| Cash tied up in the house, tax due | Liquidity problem, common | Use instalments | Elect 10-year instalments on the property share; interest applies, sale repays |
| Parents unmarried | No transfers, double exposure | Plan NOW | Wills using both individual allowances; consider marriage/CP; take advice |
| Estate includes charity gifts near 10% | 36% rate within reach | Check the maths | Topping the gift up to 10% of the net estate sometimes costs heirs almost nothing |
The executor's paperwork, in order
- IHT400: the main account of the estate (or the simpler route for excepted estates).
- IHT402: claims the first parent's unused nil-rate band; needs the first death's details.
- IHT435 + IHT436: claim the residence band and the transferred residence band.
- Evidence pile: both wills, first grant of probate, property valuation (an estate agent letter is acceptable; a RICS valuation is safer near thresholds), bank and investment statements at date of death, list of 7-year gifts.
- Payment before probate: banks release funds directly to HMRC from the deceased's accounts under the Direct Payment Scheme; ask the bank for their bereavement team.
How long things take
| Step | Typical timeline |
|---|---|
| Interest-free window to pay | 6 months from end of month of death |
| HMRC processes IHT400 and issues the probate code | Around 4 weeks from submission |
| Probate grant after that | Commonly 8 to 16 weeks |
| Instalment option on property | 10 annual payments, interest-bearing, cleared on sale |
Action checklist
- Executors: open a file, order 6+ death certificates, and start the estate valuation in week one.
- Locate the first parent's will and grant; request registry copies immediately if missing.
- Run the numbers early with the inheritance tax calculator; the answer shapes everything else.
- Diary the 6-month interest date and, if cash is short, start the bank's direct-payment process or the instalment election early.
- Families planning ahead: keep the document folder, use the £3,000 annual gift exemption, and understand that pensions usually pass outside the estate; see the pension lump sum guide before drawing pots the estate does not need.
- Heirs receiving cash: interest on it is taxable income; shelter what you can per the ISA rules guide and check exposure with the savings interest tax calculator.
Frequently asked questions
Do children pay the inheritance tax bill personally?
No: the estate pays before anything is distributed. Children only face personal tax later on what the inheritance earns (interest, dividends, rent), not on the inheritance itself.
Is there a time limit on using the first parent's allowance?
No limit between the deaths: 1998 first death, 2026 second death works fine. There IS a claim deadline: the executor must submit the transfer claim within 2 years of the second death.
What if the surviving parent remarried?
Allowances can stack from the deceased spouses, but the total transferred NRB is capped at one extra full band (100%). Blended families should map this carefully; wills drawn before remarriage are a classic source of unintended results.
Does the home need to go directly to the children for the RNRB?
It must pass to direct descendants: children, stepchildren, adopted and foster children, grandchildren. Outright inheritance qualifies; so do some trusts (bare, 18-25, disabled person's), while typical discretionary trusts do not. Selling the home before death does not lose the band: downsizing rules preserve it.
Can we avoid selling the family home to pay the tax?
Often yes: elect instalments on the property portion (10 years), pay the first tenth plus the non-property tax, and keep or rent the house while deciding. Interest accrues on the outstanding property tax, so it is a bridge, not a discount.
Are lifetime gifts always tax-free after 7 years?
Outright gifts, yes: survive 7 years and they vanish from the estate. Between 3 and 7 years, taper relief reduces the tax on gifts above the nil-rate band. And regular gifts made out of surplus income (documented) are exempt immediately, a rule families chronically underuse.
Sources
- GOV.UK: How Inheritance Tax works (accessed 27 July 2026)
- GOV.UK: Transferring an unused IHT threshold (accessed 27 July 2026)
- GOV.UK: Residence nil rate band (accessed 27 July 2026)
Written by
Laura Michelle Davis — Chartered Tax Adviser (CTA)
ACCA · CTA (Chartered Tax Adviser) · ATT · BSc Economics, UC Berkeley
Laura Michelle Davis is a Chartered Tax Adviser (CTA) who also holds the ACCA and ATT qualifications and a BSc in Economics from UC Berkeley. She specialises in UK personal tax, covering income tax, National Insurance, self-employment and capital gains, and has built her career making complicated rules easy to follow. At TaxFly, Laura writes and edits the tax guides and explainers, checking that figures reflect current HMRC rates and that every explanation answers the question a real person is actually asking. Her goal is plain-English clarity you can trust and act on.
