Widows/Widowers and Inheritance Tax

Did you know that if a a widow and widower get married, then on their deaths, they may be able to leave up to £2,000,000 to their families with paying Inheritance Tax (IHT)? How is this possible?

If you die and leave everything to your spouse, they can use your unused NRB allowance (amount you can leave before you pay IHT) when they die. And if you qualified for the RNRB (leaving your house to your children), they can use your unused RNRB too. This means that currently (July 2025) when they die, their IHT tax-free allowance could be your unused £500,000 and their £500,000, totalling £1,000,000.

Now, if your widow/widower remarries after your death, then they have their £1,000,000 allowance and their new spouse would have theirs (assuming they qualify), so you would assume a total of £2,000,000. THIS IS NOT THE CASE.

On a death, you can only ever claim the allowances of the deceased plus ONE transferable allowance, so in the above situation, £1,000,000 of allowance is wasted, meaning an unneccessary IHT bill of £400,000.

So what is the solution? The best solution is whilst still married to your first spouse, include a NRB/RNRB discretionary trust in your Will. This will ensure you have used your allowance on first death, so it is not lost on 2nd death. The next best solution is to do exactly the same solution for your second spouse. This means that you have used your allowance, so that when they die, they don't lose your allowance, assuming their executors would claim their allowance plus that of their first spouse.

So writing correct Wills with your first spouse will protect up to 4 allowances. If it is too late for that, writing correct Wills with your second spouse will protect up to 3 allowances.

EVEN IF YOU ARE NOT CURRENTLY WIDOWED, YOU MAY BE ONE DAY, SO PLEASE GET IN TOUCH FOR MORE INFORMATION.

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