Losing a parent is hard enough. Then, months later, the family learns that inheritance tax when the second parent dies can be far bigger than anyone expected, often on a house bought decades ago for a fraction of its value.
This guide explains exactly how the allowances pass between parents, and what is left to pay when the second parent dies. We follow one family's numbers from start to finish, before and after the April 2027 pension change.
Every rate comes from GOV.UK, and each calculation is shown.
Inheritance tax when the second parent dies: the short answer
Most couples leave everything to each other, so nothing is due on the first death. On the second death, the estate gets both parents' allowances: up to £1 million if the home goes to children or grandchildren and the estate is under £2 million. Anything above that is taxed at 40%.
That is the rule for inheritance tax when the second parent dies. The detail, and the traps, are below.
Why the second death is the one that counts
When a married person or civil partner dies and leaves everything to their spouse, there is no inheritance tax. This is the spouse exemption.
Better still, the first parent's allowances are not wasted. As GOV.UK explains, any unused share passes to the survivor. So when the second parent dies, their estate can use two sets of allowances.
That is why the inheritance tax bill usually lands on the second death, when the estate passes to the children.
How much is the inheritance tax threshold for parents?
There are two allowances, and each parent has both:
- The nil-rate band: £325,000 each.
- The residence nil-rate band (RNRB): up to £175,000 each, but only for a home left to direct descendants.
| Allowance | First parent (unused) | Second parent | Total on second death |
|---|---|---|---|
| Nil-rate band | £325,000 | £325,000 | £650,000 |
| Residence nil-rate band | £175,000 | £175,000 | £350,000 |
| Total | £500,000 | £500,000 | £1,000,000 |
Source: GOV.UK, passing on a home, checked October 2026. Both bands are frozen until 5 April 2031. Assumes the first parent left everything to the survivor and the home goes to children or grandchildren.
What counts as a direct descendant?
GOV.UK lists children, including adopted, foster and stepchildren, and grandchildren. Leave the home to a niece, nephew or friend and the residence nil-rate band does not apply.
What happens above £2 million?
The residence band tapers away by £1 for every £2 the estate is worth above £2 million. With two residence bands (£350,000), they are fully lost at £2.7 million. Our residence nil-rate band calculator works out the taper for you.
A worked example: one family, two dates
This is an illustrative example, not a real family.
Peter died in 2019 and left everything to his wife, Jean. No tax was due, and none of Peter's allowances were used.
Jean dies in late 2026. She leaves everything to her two children:
- the family home: £850,000
- savings and investments: £420,000
- a defined contribution pension she never drew: £400,000
If Jean dies before 6 April 2027:
- Her estate is £850,000 + £420,000 = £1,270,000. The pension sits outside it.
- Her allowances total £1,000,000 (two nil-rate bands and two residence bands).
- Taxable estate: £270,000.
- Inheritance tax at 40%: £108,000.
If Jean dies after 6 April 2027:
- The unused pension now counts: £1,270,000 + £400,000 = £1,670,000.
- Allowances are still £1,000,000. The estate is under £2 million, so no taper.
- Taxable estate: £670,000.
- Inheritance tax at 40%: £268,000.
The same family, the same assets, and £160,000 more tax, purely because of the date.
Jean is not unusual. The government's own policy paper, updated on 26 November 2025, estimates that in 2027/28 around 10,500 estates will owe inheritance tax that would not have before, and 38,500 will pay more. The average bill rises by about £34,000. Because pensions left to a spouse or civil partner stay exempt, the extra tax mostly bites when money passes to the next generation. Our guide to inheritance tax on pensions from 2027 explains the change in full.
How is inheritance tax on property paid?
Executors must pay inheritance tax by the end of the sixth month after death. Interest is charged after that.
For a house, there is some breathing room. GOV.UK allows tax on land and buildings to be paid in equal yearly instalments over 10 years, as long as the property is not sold. Interest applies to the later instalments.
Many families end up selling an inherited house to settle the bill. That is fine, but plan for the timing. Probate and inheritance tax work together: you usually need to pay some tax before HMRC probate paperwork lets you sell.
How do executors claim the unused allowances?
The executors of the second parent make the claim. For the nil-rate band, they use form IHT402 alongside the full IHT400 return, within 2 years of the second death.
They will need details of the first death: the date, the will, and what passed to whom. If the first parent left some money to the children directly, part of their nil-rate band was used, and only the unused percentage transfers.
GOV.UK gives the example of £130,000 used out of £325,000. That is 40% used, so 60% transfers to the survivor.
Mistakes families make with inheritance tax when the second parent dies
- Assuming the house is safe because it is "only" the family home. In much of England, the home alone can use most of the £1 million.
- Leaving the home to the wrong people. The residence band needs direct descendants.
- Losing the first parent's paperwork. Executors need it to claim the transfer, sometimes decades later.
- Ignoring pensions from April 2027. Unused pensions can push an estate over £1 million, or over the £2 million taper point.
- Not budgeting for the deadline. Tax is due within six months, often before the house is sold.
"Frozen tax thresholds, hikes to investment taxes and cuts to allowances mean we're on track for yet another record tax year."
Sarah Coles, Head of Personal Finance, AJ Bell, September 2026
What can parents do now?
Start with the facts: what the home is worth, what is in savings and pensions, and what has been given away in the last 7 years. Our guide to the 7 year rule inheritance tax uses explains how gifts fit in.
Then run the numbers for inheritance tax when the second parent dies, both before and after April 2027. Our inheritance tax calculator does this with the rules it used shown alongside. The residence nil-rate band rule page keeps the current figures and their source.
Plenence models inheritance tax for education only. For wills, trusts or lifetime gifts of property, speak to a solicitor or regulated adviser.