Everyone has the same basic tax-free allowance before they must pay inheritance tax (IHT). The current threshold is £325,000. If the threshold has not been fully used when the first person in a marriage or civil partnership dies, it can be transferred to the surviving spouse or civil partner.

The basic tax-free allowance available when a spouse or civil partner dies can be as much as £650,000 if none of their £325,000 threshold was used when the first partner of the couple died.

The percentage of the threshold that was not used when the first partner died increases the basic threshold available for the surviving partner’s estate.