£1Million Tax-Free
Last verified: February 2026 (England & Wales)
Many people have heard “a couple can pass £1 million tax-free”. That can be true, but it is not automatic and it is not a universal allowance. It depends on
(1) marital status,
(2) whether a qualifying home is involved,
(3) who inherits it, and
(4) whether the estate size triggers taper.
Quick-read summary
- The nil-rate band (NRB) is usually £325,000 per person.
- The residence nil-rate band (RNRB) can add up to £175,000 per person if a qualifying home (or qualifying downsizing) is left to direct descendants.
- For married couples and civil partners, unused percentages of NRB and RNRB can usually be transferred to the survivor.
- In a common family scenario, that can produce up to £650,000 (NRB) plus up to £350,000 (RNRB) = up to £1 million.
- The RNRB starts tapering away for estates over £2 million.
"£1 million tax-free” is a maximum outcome for a common scenario. It is not a blanket rule.
How inheritance tax works, in plain English
Inheritance tax is often discussed as “40 percent over the threshold”. In reality, the outcome depends on what you own, who it passes to, and what allowances and exemptions apply. Small drafting details can change what is claimable.
The building blocks
- Nil-rate band (NRB)
Most people have a basic threshold of £325,000. - Residence nil-rate band (RNRB)
If a qualifying home is “closely inherited” by direct descendants, there can be an additional threshold of up to £175,000. - Transfer rules for couples
If the first spouse or civil partner dies without using all of their allowances, the unused percentage can usually be claimed on the second death.
This is one reason married couples and civil partners can be in a very different position to long-term cohabiting couples.
When the “£1 million” result is realistic
For many families, it comes down to four conditions:
Condition 1: married or in a civil partnership (for spouse exemption and transferable allowances).
Condition 2: a qualifying home exists now, or there was qualifying downsizing.
Condition 3: the home (or equivalent value) passes to direct descendants.
Condition 4: the estate is not large enough for the RNRB taper to remove the allowance.
Who counts as a direct descendant
This is usually children, grandchildren and other lineal descendants. It can include adopted children and stepchildren. It does not include siblings, nieces or nephews.If your family situation is blended or complicated, it is worth checking this properly before you rely on RNRB.How the home needs to pass
The home can pass as a specific gift or as part of the residue. The key is whether it is treated as “closely inherited” by direct descendants on death. Some trust-based Wills can still be compatible, but not all. Drafting detail matters.
How the RNRB taper works above £2 million
If the net estate is over £2 million, the RNRB reduces by £1 for every £2 above £2 million. In practical terms, that can remove some or all of the RNRB.
If you are close to £2 million, it is worth checking the taper before you assume the “£1 million” result.
Downsizing
Selling or downsizing does not always lose the RNRB. In some cases a downsizing addition can preserve some benefit. This is a common trigger to review Wills so the drafting keeps pace with life changes.
Cases
The classic “£1 million” scenario
A married couple own a family home and leave everything to each other on first death, then to their children on second death. With correct drafting, the survivor can often claim unused allowances and combine NRB and RNRB to reach a figure close to £1 million.
The common-law myth
A long-term unmarried couple assume they have the same protections as spouses. They do not. Spouse exemption and transferable allowances do not apply, and the “£1 million” assumption is often wrong without a joined-up Will plan.
Married, no direct descendants
A couple are married but have no children and plan to leave wealth to wider family. Transferable NRB may still be relevant, but RNRB depends on leaving a qualifying home to direct descendants, so the “£1 million” headline may not apply.
Blended family, survivor protection, and keeping inheritance on track
A remarried client wants the survivor protected, but wants their share of the home to ultimately pass to their own children. A properly drafted structure can often protect the survivor and keep reliefs on track. A poorly drafted structure can create tax surprises or family disputes.Case
Estate over £2 million
A couple have a larger estate and assume they still get “£1 million tax-free”. In many cases the taper reduces or removes the RNRB. This is where a review is essential to avoid a false sense of security.
£1 million tax-free guaranteed for every couple?
No. It is a maximum outcome for a common scenario and depends on marital status, a qualifying home, who inherits it, and the £2 million taper.
Do we have to leave the home directly to children?
The concept is “closely inherited” by direct descendants. The drafting route matters, especially where trusts are involved.
What if we sell or downsize?
There may still be a route through downsizing rules. It is worth checking when you move.
What if our estate is over £2 million?
The RNRB starts tapering away and can be lost. A proper review is needed if you are near or above that figure.
Keeping this useful and safe
This page is general information only. Tax rules and family structures vary, and small drafting details can change outcomes.
Next steps
If you want a clear answer for your family, we can sanity-check it quickly and properly: confirm what you own and how it is owned, confirm whether RNRB is likely to apply, and ensure your Wills and any trust planning align with the outcome you actually want.
