IHT402 Worked Example: Transferring 100% Unused Nil-Rate Band on the Second Death

When the first spouse or civil partner dies and leaves everything to the survivor, none of their £325,000 nil-rate band is used — so on the second death you can transfer the unused percentage (up to 100%) onto the survivor's estate using form IHT402, doubling the tax-free band to £650,000. You claim a percentage, not a fixed cash sum, and you attach the first death's will, grant, death certificate and marriage or civil-partnership certificate.

When IHT402 applies

IHT402 is the form you submit alongside IHT400 to "transfer to the deceased's estate any unused Inheritance Tax threshold (or 'nil rate band') from the previously deceased spouse or civil partner" (gov.uk — IHT402).

The standard nil-rate band (NRB) is £325,000, and anything above the available threshold is taxed at 40% (gov.uk — Inheritance Tax). When someone dies, any unused threshold can be added to their surviving partner's threshold when the survivor later dies. So IHT402 only ever runs on the second death — it is the survivor's executors who claim it, looking back at what happened on the first death.

Crucially, what transfers is a percentage of the band that was unused on the first death — not the cash figure that applied back then. That percentage is then applied to the £325,000 band in force at the second death. This matters because it means the transfer keeps its value even if the band has changed since the first death.

Three quick conditions

• The first person to die was the spouse or civil partner of the person who has now died (not an unmarried partner — there is no transfer between cohabitees).
• You are claiming on the death of the survivor, using their IHT400.
• You can evidence what happened on the first death (see the documents section below).

Worked example: 100% transfers (everything left to the survivor)

When only part of the band was used: the percentage method

It is not always 100%. If the first person to die left a chargeable gift — for example, a legacy to children rather than to the surviving spouse — then part of their band was used, and only the remaining percentage transfers.

The arithmetic on IHT402 always works in percentages because the cash value of the band can change over time. You record the value used on the first death, divide by the band then in force to get the percentage used, and the form derives the percentage available to transfer.

The maximum you can transfer is 100% of one band — so the most a survivor's estate can ever have is two full bands (£650,000 at today's rate). You can claim from more than one predeceased spouse if the survivor was widowed more than once, but the total transfer is still capped at 100%.

The documents HMRC wants attached

HMRC needs to verify what happened on the first death, often years or decades earlier. For the IHT402 claim, send copies of the following from the first death:

• The will (and any codicils) of the first person to die — or confirmation they died intestate, with how the estate passed.
• The grant of representation (grant of probate, or grant of letters of administration) for the first death, if one was taken out.
• The death certificate of the first person to die.
• The marriage certificate or civil-partnership certificate — this is what proves the two people were spouses or civil partners, which is the whole basis of the transfer.

If a deed of variation, a grant, or any of these documents do not exist (common for an estate that passed entirely to the survivor and never needed probate), say so on the form and provide whatever evidence you do have. HMRC publishes the form and its notes at gov.uk — Claim to transfer unused nil rate band (IHT402).

The same logic for the residence nil-rate band — IHT436

There is a second, separate allowance: the residence nil-rate band (RNRB), worth up to £175,000 where a home is left to direct descendants (children, grandchildren). Combined with the standard band, that is how an individual's threshold can reach £500,000 (gov.uk).

The unused RNRB works exactly the same way: a transferable percentage, claimed on the second death, this time on form IHT436 (gov.uk — Residence nil rate band). You "calculate the amount of transferred residence nil rate band that the survivor's estate can claim using the percentage of residence nil rate band that was not used when the first of the couple died."

Two things to watch on the RNRB:

• Taper: the RNRB reduces by £1 for every £2 the estate is worth above the £2 million taper threshold (gov.uk).
• It can transfer even if the first spouse died before the RNRB existed (the RNRB started 6 April 2017) — because in that case 100% was unused, so 100% can still be claimed against the current £175,000.

Where both apply, a surviving spouse's estate could in principle have two standard bands plus two residence bands — up to £1,000,000 tax-free — using IHT402 and IHT436 together.

How to fill in IHT402 — step by step

1. Identify the first death: name, date of death, and the relationship (spouse/civil partner).
2. State the nil-rate band in force on the first death and how much of it was used by chargeable transfers (gifts to anyone other than the surviving spouse, plus any chargeable lifetime gifts in the 7 years before death).
3. Work out the percentage used = value used ÷ band then in force.
4. The transferable percentage = 100% − percentage used.
5. Apply that percentage to today's £325,000 to get the cash uplift to the survivor's band.
6. Attach the supporting documents listed above and submit with the IHT400.