When the first parent dies, their assets will often pass to the surviving husband, wife or civil partner without an immediate Inheritance Tax bill. This can make families wonder what happens to inheritance tax when second parent dies, particularly when the family home, savings and investments are eventually passed to children.
The important point is that Inheritance Tax is assessed on the estate of the second parent when they die. However, where the parents were married or in a civil partnership, unused Inheritance Tax allowances from the first parent can potentially be transferred to the second parent’s estate.
Under the current 2026/27 rules, an individual normally has a £325,000 nil-rate band. There is also a residence nil-rate band of up to £175,000 where a qualifying home passes to direct descendants. These thresholds remain at those levels for 2026/27.
If the first spouse or civil partner used none of these allowances, a qualifying married couple or civil partnership may potentially pass on as much as £1 million without Inheritance Tax when the second person dies.
That £1 million figure is not automatic, however. The size of the estate, what happened when the first parent died, who inherits the home and previous gifts can all affect the final tax calculation.
How Does Inheritance Tax Work When the Second Parent Dies?
When the second parent dies, the executor or administrator needs to calculate the value of their estate.
This can include:
- Property
- Money in bank accounts
- Savings
- Investments
- Shares
- Vehicles
- Jewellery and valuable possessions
- Business interests
- Certain trusts
- Some gifts made before death
Debts and certain allowable liabilities are normally deducted before the taxable estate is calculated.
Inheritance Tax is generally charged at 40% on the taxable value above the available tax-free thresholds.
The basic calculation can therefore be expressed as:
Estate value − available exemptions, reliefs and tax-free bands = taxable estate
Inheritance Tax is then normally charged at 40% on the taxable portion.
The complication following the death of a second parent is that the estate may have access to unused allowances belonging to the first parent.
How Much Can Children Inherit Tax-Free After Both Parents Die?
For a qualifying married couple or civil partnership, the maximum commonly discussed tax-free amount is £1 million.
This can potentially consist of:
| Inheritance Tax Allowance | Second Parent | Transferred From First Parent | Potential Total |
| Nil-rate band | £325,000 | £325,000 | £650,000 |
| Residence nil-rate band | £175,000 | £175,000 | £350,000 |
| Potential combined threshold | £500,000 | £500,000 | £1,000,000 |
The ordinary nil-rate band is currently £325,000 and the residence nil-rate band is £175,000. Unused allowances can potentially transfer between spouses and civil partners.
However, the £1 million figure only applies where all the relevant conditions are satisfied.
In particular, the residence nil-rate band normally requires a qualifying residence to be inherited by direct descendants such as children or grandchildren.
Why Can the First Parent’s Tax Allowance Transfer?
Assets transferred between spouses or civil partners are generally covered by the spouse or civil partner exemption.
Imagine the first parent dies and leaves their entire estate to their spouse.
Because the transfer is exempt, that parent’s standard nil-rate band may remain completely unused.
When the surviving parent eventually dies, the personal representatives can potentially claim the unused percentage of the first parent’s nil-rate band.
HMRC confirms that the nil-rate band available on the second death can be increased by up to 100% where the first spouse or civil partner left their allowance unused.
With today’s £325,000 nil-rate band, that can create a total standard allowance of:
£325,000 + £325,000 = £650,000
This transfer is particularly important when calculating inheritance tax after the second parent’s death.
Is the Full £650,000 Inheritance Tax Allowance Automatic?
No.
A common misunderstanding is that every married couple automatically receives a £650,000 nil-rate band after the second death.
The amount transferred depends on how much of the first parent’s nil-rate band was unused.
For example, suppose the first parent left most of their estate to their spouse but also made taxable transfers that used part of their nil-rate band.
Only the unused proportion may be transferred.
HMRC calculates the transferable nil-rate band using a percentage rather than simply transferring the historical cash value of the allowance.
If 100% remained unused, 100% can potentially transfer.
If only 50% remained unused, only 50% can potentially be added to the surviving parent’s nil-rate band.
How Does the Residence Nil-Rate Band Affect the Second Parent’s Estate?
The residence nil-rate band can provide another £175,000 per person.
Its purpose is to provide an additional Inheritance Tax threshold where a qualifying home is passed to direct descendants.
Direct descendants can generally include:
- Children
- Grandchildren
- Great-grandchildren
- Stepchildren
- Adopted children
- Foster children in qualifying circumstances
A qualifying estate can potentially claim both the normal nil-rate band and the residence nil-rate band.
Where the first spouse or civil partner did not use their residence nil-rate band, the unused amount can also potentially transfer.
That can give the estate of the second parent a residence nil-rate band of up to:
£175,000 + £175,000 = £350,000
Combined with the £650,000 standard nil-rate band, the potential total reaches £1 million.
Does the Family Home Have to Be Worth £350,000?
The residence nil-rate band cannot simply be applied regardless of the property involved.
The estate generally needs to include a qualifying residence that is inherited by direct descendants.
The amount of residence nil-rate band available can also be restricted by the value of the qualifying home.
HMRC does provide special rules where someone downsized, sold or gave up their former home after 8 July 2015, so families should not automatically assume the allowance has been lost simply because the second parent moved to a smaller property or care accommodation.
What Happens If the Second Parent’s Estate Is Worth £900,000?
Consider a straightforward example.
A married couple owned assets ultimately worth £900,000.
The first parent died and left everything to the surviving spouse. None of the first parent’s ordinary nil-rate band or residence nil-rate band was used.
The second parent later dies, leaving the qualifying family home and remaining estate to the children.
Potential allowances could be:
- £325,000 second parent’s nil-rate band
- £325,000 transferred nil-rate band
- £175,000 second parent’s residence nil-rate band
- £175,000 transferred residence nil-rate band
Total potential allowance: £1 million
Because the £900,000 estate falls below the potential £1 million threshold, there may be no Inheritance Tax to pay, assuming all requirements are met and there are no other complications such as chargeable lifetime gifts.
What Happens If the Estate Is Worth £1.2 Million?
Using the same simplified circumstances, suppose the second parent’s estate is worth £1.2 million.
If the full £1 million combined threshold is available:
Estate value: £1,200,000
Available allowances: £1,000,000
Taxable amount: £200,000
Inheritance Tax at 40%: £80,000
The estate could therefore face an approximate £80,000 Inheritance Tax bill.
This is a simplified illustration. Real calculations may differ because of debts, gifts, trusts, charitable donations, property valuations and other reliefs.
What Happens to the £1 Million Allowance on Estates Over £2 Million?
Families with larger estates need to pay particular attention to the residence nil-rate band.
The residence nil-rate band starts to taper where the net estate is worth more than £2 million.
HMRC reduces the available residence nil-rate band by £1 for every £2 by which the estate exceeds £2 million.
This means a high-value estate may lose part or eventually all of its residence nil-rate band.
The ordinary £325,000 nil-rate band does not have the same £2 million taper.
As a result, assuming that every married couple with children can automatically leave £1 million tax-free can produce an inaccurate calculation.
What If the First Parent Left Money Directly to the Children?
Leaving some assets to children when the first parent dies may use part of the first parent’s nil-rate band.
For example, if the first parent made chargeable transfers to children rather than leaving everything to their spouse, some of their £325,000 allowance may have been used.
This can reduce the percentage available to transfer when the second parent eventually dies.
It is therefore important to obtain records relating to the first parent’s estate rather than assuming that 100% of the allowance remains available.
Useful documents can include:
- The first parent’s will
- Probate documents
- Earlier Inheritance Tax forms
- Estate accounts
- Details of lifetime gifts
- Property valuations
- Records showing who inherited each asset
These records can become extremely important many years after the first death.
What If the Parents Were Not Married?
This is one of the most important distinctions.
The transferable nil-rate band rules generally apply between spouses and civil partners.
Simply being the parents of the same children or living together for many years does not automatically create the same Inheritance Tax treatment.
An unmarried partner cannot usually transfer their unused nil-rate band to the surviving partner in the same way as a spouse or civil partner.
This could make a substantial difference.
For example, two unmarried parents cannot simply combine their £325,000 nil-rate bands into a £650,000 allowance on the second death merely because they had children together.
Estate planning can therefore be particularly important for unmarried couples.
Do Gifts Made Before the Second Parent Dies Affect Inheritance Tax?
Potentially.
Gifts made during the seven years before death can affect the amount of nil-rate band available to the estate.
Under the seven-year rule, a qualifying outright gift is generally outside the donor’s estate for Inheritance Tax if they survive for at least seven years after making it.
If the donor dies earlier, the gift may need to be considered when calculating Inheritance Tax.
Taper relief can reduce tax on certain chargeable gifts made between three and seven years before death, although taper relief reduces the tax due on the gift, rather than simply reducing the value of the gift itself.
Executors should therefore establish whether the second parent made significant gifts during the years before death.
Can a Parent Give Their House to Their Children to Avoid Inheritance Tax?
Simply transferring ownership of the house is not necessarily enough.
If a parent gives their home to a child but continues living there rent-free, HMRC may treat it as a gift with reservation of benefit.
That can mean the property continues to form part of the parent’s estate for Inheritance Tax purposes.
This is one reason families should be cautious about supposed methods of avoiding Inheritance Tax by transferring property shortly before death.
Professional estate-planning advice can be worthwhile before making substantial gifts or changing property ownership.
Does Inheritance Tax Apply to Business Assets When the Second Parent Dies?
Special rules can apply where the estate contains qualifying business or agricultural property.
From 6 April 2026, the combined amount of qualifying agricultural and business property that can receive 100% Agricultural Relief or Business Relief is generally capped at £2.5 million per individual. Qualifying value above the available allowance normally receives 50% relief.
Unused amounts of the £2.5 million allowance can also potentially transfer between spouses or civil partners, meaning up to £5 million may be available in qualifying circumstances.
Business owners should therefore consider these rules separately from the standard nil-rate bands.
Families following the wider policy debate may also find the site’s coverage of inheritance tax changes useful, although current HMRC rules should always be checked when making an estate-planning decision.
Will Pension Funds Affect Inheritance Tax?
This area is changing.
For deaths occurring before 6 April 2027, the existing treatment continues to apply.
However, legislation has now been enacted to bring most unused pension funds and pension death benefits into a deceased person’s estate for Inheritance Tax from 6 April 2027.
Death-in-service benefits from registered pension schemes are among the exclusions.
This change could be particularly important for families where the second parent has accumulated substantial pension wealth.
Someone planning an estate now should therefore consider both the current rules and the confirmed April 2027 pension changes.
Who Actually Pays the Inheritance Tax?
Inheritance Tax is normally paid from the deceased person’s estate.
The executor named in the will, or the administrator where there is no will, is generally responsible for dealing with HMRC.
Children do not normally receive an Inheritance Tax invoice simply because they inherit an asset. Instead, the estate normally settles the liability before the remaining assets are distributed.
Different rules can apply to certain lifetime gifts and trusts.
When Does Inheritance Tax Have to Be Paid?
Inheritance Tax is normally due by the end of the sixth month after the month in which the person died.
For example, if someone dies during January, the payment deadline is normally 31 July.
Interest can be charged when tax is paid late.
Some Inheritance Tax generally has to be paid before probate can be obtained.
For certain assets that can be difficult to sell immediately, including qualifying property, HMRC may allow tax to be paid in annual instalments.
How Do Executors Claim the First Parent’s Unused Allowance?
The unused allowance does not simply appear because the parents were married.
The personal representatives dealing with the second estate may need to provide information about the first spouse or civil partner.
HMRC uses form IHT402 with the IHT400 where a claim is made to transfer an unused standard nil-rate band from a deceased spouse or civil partner.
For the residence nil-rate band:
- IHT435 is used to claim the residence nil-rate band.
- IHT436 can be used to claim a transferred unused residence nil-rate band from a spouse or civil partner who died earlier.
Keeping documents from the first parent’s estate can therefore make administration considerably easier after the second death.
Can the Allowance Be Transferred If the First Parent Died Many Years Ago?
Potentially, yes.
For the ordinary transferable nil-rate band, HMRC confirms that where the surviving spouse or civil partner dies on or after 9 October 2007, the first spouse may have died much earlier and an unused proportion can still potentially be transferred.
The residence nil-rate band has its own rules.
HMRC specifically confirms that an unused residence nil-rate band can potentially be transferred even where the first spouse died before the residence nil-rate band was introduced on 6 April 2017.
Families should therefore not assume an allowance has been lost merely because the first parent died a long time ago.
What Should Families Check After the Second Parent Dies?
Before calculating Inheritance Tax, executors should establish a complete picture of both estates.
Important checks include:
- Confirm marital status – Determine whether the parents were married or civil partners.
- Find the first parent’s records – Establish how much of their nil-rate band was previously used.
- Value the second parent’s estate – Include property, investments, savings and other relevant assets.
- Identify lifetime gifts – Review significant gifts made during the previous seven years.
- Check the family home – Determine whether the residence nil-rate band can apply.
- Identify direct descendants – Check who will inherit the qualifying residence.
- Review business assets – Business or agricultural relief may alter the calculation.
- Check pensions – Particularly where the death occurs on or after 6 April 2027.
- Review debts and liabilities – Certain legitimate liabilities can reduce the estate’s taxable value.
- Complete the correct HMRC forms – Transferable allowances may need to be formally claimed.
Large or complex estates may benefit from specialist probate, legal or tax advice.
Is There Always Inheritance Tax When the Second Parent Dies?
No.
The death of the second parent does not automatically create an Inheritance Tax bill.
For many married couples and civil partners, transferring unused allowances from the first death means the second parent’s estate remains below the available tax-free threshold.
A qualifying estate could potentially have up to £650,000 of ordinary nil-rate band and another £350,000 of residence nil-rate band, creating the commonly quoted £1 million maximum.
However, this depends on whether the first parent’s allowances were unused, whether the residence rules are satisfied, the value of the estate and whether previous gifts or other factors affect the calculation.
What Is the Final Position on Inheritance Tax When the Second Parent Dies?
When considering inheritance tax when second parent dies, families should not simply apply 40% to the entire estate.
The first step is to establish which exemptions, reliefs and transferable allowances are available.
In 2026/27, the standard nil-rate band remains £325,000 per person, while the residence nil-rate band remains £175,000 per person. A qualifying married couple or civil partnership may therefore potentially pass up to £1 million to direct descendants without Inheritance Tax where both sets of allowances are fully available.
The 40% rate generally applies only to the taxable portion remaining after applicable exemptions, reliefs and allowances have been considered.
Because the result can change significantly depending on what happened when the first parent died, executors should locate the earlier estate documents before making the final Inheritance Tax calculation.
Frequently Asked Questions
Do you pay Inheritance Tax after both parents have died?
Inheritance Tax may be payable when the second parent’s estate exceeds the available tax-free allowances. It is not automatically payable simply because both parents have died.
Can children inherit £1 million tax-free from their parents?
Potentially. A qualifying married couple or civil partnership can have combined nil-rate bands and residence nil-rate bands worth up to £1 million, provided all relevant conditions are satisfied.
What happens if the first parent did not use their Inheritance Tax allowance?
The unused percentage of the ordinary nil-rate band can potentially transfer to the surviving spouse or civil partner and be claimed when their estate is administered.
Is Inheritance Tax charged at 40% on the whole estate?
No. The standard 40% rate generally applies to the taxable value above the available thresholds after relevant exemptions and reliefs are taken into account.
Does the £1 million allowance apply to unmarried parents?
Not in the same way. The transferable nil-rate band provisions relate to spouses and civil partners, so unmarried couples should not assume their unused allowances can be combined.
Can the second parent’s house use both parents’ allowances?
Potentially. Where the relevant conditions are satisfied and the home passes to direct descendants, the second estate may claim its own residence nil-rate band plus unused residence nil-rate band transferred from a deceased spouse or civil partner.
What happens if the estate is worth more than £2 million?
The residence nil-rate band begins to taper away once the net estate exceeds £2 million, reducing by £1 for every £2 above the threshold.
Do children personally have to pay the Inheritance Tax bill?
Usually, the estate pays the tax through its executor or administrator before assets are distributed. Different rules can apply to certain lifetime gifts and trusts.
