Losing your second parent is not only an emotional blow but also a time when you may need to navigate complex legal and financial matters. One of the most significant concerns for many families in the UK is understanding inheritance tax when the second parent dies. Knowing the rules and planning accordingly can help reduce unnecessary stress—and possibly even reduce your tax burden.
In this comprehensive guide, you’ll learn everything you need to know about inheritance tax (IHT) in the UK as it applies after the second parent passes away.
What Is Inheritance Tax and When Does It Apply in the UK?
Definition of Inheritance Tax (IHT)
A tax on a deceased person’s estate, which includes their assets, money, and property, is known as the Inheritance Tax (IHT). For the percentage of the estate that is over the nil-rate band (threshold), the standard rate in the UK is 40%.
Basic Rules: When Is Inheritance Tax Payable?
Inheritance tax typically becomes due if:
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The estate’s overall worth above the £325,000 nil-rate limit.
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There are no applicable exemptions or reliefs (such as spousal or charitable exemptions)
Who Is Responsible for Paying IHT?
The executor of the will (or administrator if there is no will) is responsible for:
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Calculating the estate’s value
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Submitting IHT forms to HMRC
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Making certain that taxes are paid prior to the distribution of assets
What Happens to Inheritance Tax When the Second Parent Dies?
Is There a Difference Between First and Second Parent Passing?
Yes. Because of the spousal exemption, assets bequeathed to the surviving spouse after the death of the first parent are often free from IHT. No tax is paid at that point.
However, when the second parent dies, the estate is now assessed in full against IHT thresholds. This is typically when inheritance tax becomes a real liability.
How Does the Estate Change Upon the Second Death?
After the second parent’s death:
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The combined estate (often including assets from both parents) is valued
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The estate may now exceed the IHT threshold
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Children or beneficiaries may be liable for paying tax before receiving their inheritance
Does Spousal Exemption Still Apply?
No, only when assets are transferred between spouses does the spousal exemption apply. Once both parents have died, the exemption is no longer available.
How Are Inheritance Tax Thresholds Affected?
The Nil-Rate Band Explained
The threshold below which inheritance tax is not imposed is known as the nil-rate band (NRB). This amounts to £325,000 per individual as of 2025.
What Is the Residence Nil-Rate Band (RNRB)?
Introduced in 2017, the Residence Nil-Rate Band adds up to £175,000 if you leave your main residence to direct descendants (children or grandchildren).
Can You Combine Thresholds from Both Parents?
Yes! The threshold may be doubled if the first parent failed to use their NRB or RNRB and it is passed to the second parent.
Combined Allowances Example:
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Nil-Rate Band: £325,000 + £325,000 = £650,000
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Residence Nil-Rate Band: £175,000 + £175,000 = £350,000
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Total Allowance = £1,000,000 (if all conditions are met)
What If the Estate Is Above the Inheritance Tax Threshold?
Calculating IHT After Second Death
The component of the estate that is worth more than £1,000,000 (the sum of the NRB and RNRB) is subject to 40% tax.
Potential Tax Liabilities for Children or Beneficiaries
Children may have to sell assets, take loans, or use savings to pay the tax before they can inherit the rest of the estate.
Common Examples of Taxable vs Non-Taxable Estates
| Estate Value | NRB Used | RNRB Used | Taxable Amount | Estimated IHT (40%) |
|---|---|---|---|---|
| £800,000 | £650,000 | £0 | £150,000 | £60,000 |
| £1,200,000 | £650,000 | £175,000 | £375,000 | £150,000 |
| £1,000,000 | £650,000 | £350,000 | £0 | £0 |
What Steps Should You Take After the Second Parent Passes Away?
Initiating Probate and Dealing with HMRC
You’ll need to apply for probate before accessing or distributing the estate. Your ability to handle the deceased’s affairs is validated by probate.
Collecting Documents and Valuing the Estate
Gather:
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The will (if available)
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Property deeds
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Bank account balances
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Pension and investment records
Understanding Time Limits and Reporting Deadlines
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After death, IHT must be paid within 6 months.
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Probate cannot be granted until some or all of IHT is paid.
Key Administrative Steps:
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Apply for the death certificate
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Assess estate value
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Submit IHT forms to HMRC
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Apply for probate
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Distribute estate to heirs
How to Reduce or Avoid Inheritance Tax After the Second Parent Dies?
Gifting and Lifetime Transfers
By giving presents while they are still living, parents might lower their estate. Some are immediately exempt, while others become exempt after 7 years (the 7-Year Rule).
Setting Up Trusts
Using discretionary or lifetime trusts can help manage the estate and reduce taxable value.
Using the Main Residence Exemption Effectively
Ensure the family home is left directly to children to qualify for the residence nil-rate band.
Common Strategies to Minimise IHT:
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Make use of annual £3,000 gift exemption
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Place life insurance in trust
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Use business property relief
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Leave money to charity (reduces tax rate to 36%)
Conclusion
Understanding inheritance tax when the second parent dies is essential for effective estate planning and avoiding unexpected tax burdens. With the right preparation, your family can take advantage of allowances, exemptions, and legal strategies to protect your legacy.
If you’re facing this situation, consider speaking with a qualified solicitor or financial adviser to ensure you’re fully compliant with UK inheritance laws and making the best financial decisions for your family.
FAQs About Inheritance Tax and Second Parent Death
Do I Pay Tax on Inheritance from Both Parents?
Because of the spousal exemption, taxes are normally not required after the first death. But IHT often applies after the second death, depending on the estate value.
What If There Is No Will?
The estate is distributed under intestacy rules, which may lead to more tax being due and longer delays.
What Happens to the Family Home?
If passed directly to children or grandchildren, it may qualify for the residence nil-rate band, helping reduce IHT.
Can the Surviving Spouse’s IHT Allowance Be Transferred?
Yes. The tax-free allowance can be doubled by transferring unused nil-rate bands and resident nil-rate bands.
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- Is private health insurance tax deductible for self-employed UK?
- HMRC MTD Income Tax Changes 2026
I’m Joe Chris, co-author at ukbusinessmag.co.uk and a long-time enthusiast of all things business and finance. My background is in digital marketing and e-commerce, and I love diving into trends that impact the UK business landscape. Through my writing, I aim to make useful, real-world advice accessible to business owners.
