Inheritance tax treats an unmarried partner as a stranger, however long the relationship: there is no spouse exemption, no transfer of an unused nil rate band and no residence nil rate band for leaving a home to a partner. Anything one partner leaves the other above the nil rate band, including a share of a jointly owned home passing by survivorship, can be taxed at 40%, so a will, life cover in trust and planned gifts carry real weight.

Why does the spouse exemption not apply?

Section 18 of the Inheritance Tax Act 1984 exempts transfers between spouses and civil partners. HMRC’s Inheritance Tax Manual at IHTM11032 explains that the Act does not define spouse, so general law applies, and that people living together but not lawfully married are not spouses in England, Wales and Northern Ireland, however long the relationship has lasted. In Scotland, marriage by cohabitation with habit and repute was abolished by the Family Law (Scotland) Act 2006, although claims based on cohabitation before it took effect can still arise.

The same manual page confirms that civil partnerships have been open to opposite sex couples in England and Wales since 2 December 2019. A couple who marry or form a civil partnership get the exemption from that date onwards; it does not reach back to earlier gifts.

What else do married couples get that cohabitants do not?

  • Transferable nil rate band. Section 8A applies only where the deceased had a spouse or civil partner. A cohabitant’s unused £325,000 nil rate band is lost on their death. See transferring an unused nil rate band.
  • Residence nil rate band. This extra £175,000 for 2026 to 2027 applies only where a home is closely inherited by lineal descendants and certain relatives under section 8K. A partner is not a descendant, and GOV.UK guidance states a stepchild is only someone whose parent is or was the deceased’s spouse or civil partner. A partner’s children from an earlier relationship therefore do not count unless the couple married or formed a civil partnership. See residence nil rate band.
  • Lifetime gifts. Gifts between partners are ordinary gifts. Under the GOV.UK gifts guidance they are free of tax only if covered by an exemption, such as the £3,000 annual exemption, or if the giver survives seven years.

One rule works the other way. Under section 161, property owned by a spouse or civil partner is related property and is valued together with the deceased’s share. Unmarried co owners are outside that rule, which can help with the valuation of a share in a home, as explained below.

What happens if there is no will?

In England and Wales, the intestacy rules in section 46 of the Administration of Estates Act 1925 provide for a surviving spouse or civil partner, then relatives. A cohabitant has no automatic share. Their remedy is a claim under the Inheritance (Provision for Family and Dependants) Act 1975: section 1(1A) lets a person claim who lived in the same household as the deceased, as if married or civil partners, for the whole two years before the death. Section 4 requires the claim within six months of the grant unless the court permits a later one, and an award is limited to what is reasonable for maintenance.

For inheritance tax, section 146 treats property passing under a court order as if the deceased had left it that way. That does not create a spouse exemption, so an award to a partner is still chargeable. See intestacy and inheritance tax.

How does joint ownership affect the tax?

Many couples assume a home held as joint tenants simply passes to the survivor outside the estate. It does pass automatically, but HMRC explains at IHTM15012 that a person’s beneficial share of joint property forms part of their estate for inheritance tax, and at IHTM15031 that for joint tenants each owner’s share is usually equal. So half the home is taxed on the first death, with no exemption for the partner who inherits it.

Two practical points follow. Joint bank accounts are treated by HMRC as belonging to each holder in proportion to their contributions (IHTM15042), so an account funded mainly by the deceased can be taxed almost in full. And for a share in a house, IHTM15072 says that in England, Wales and Northern Ireland the nature of joint ownership results in a discount on the open market value, which the District Valuer builds into the value of the share. Because the related property rule only applies to spouses, an unmarried partner’s half share is valued as a share, not as half of the whole. The choice between joint tenancy and tenancy in common is covered in joint tenants vs tenants in common.

How does this look in numbers?

Illustration only. Sam and Alex are unmarried and own a £600,000 home as joint tenants. Sam also has £250,000 of savings, and leaves everything to Alex. There are no lifetime gifts and no children.

Item Unmarried Married
Half share of home (before any discount) £300,000 £300,000
Savings £250,000 £250,000
Exempt as passing to spouse Nil £550,000
Nil rate band £325,000 Unused, can pass to survivor
Taxable £225,000 Nil
Tax at 40% £90,000 Nil

A discount on the half share would reduce the unmarried figure. On Alex’s later death, a married survivor could also claim Sam’s unused nil rate band; an unmarried survivor cannot.

What planning options are available?

  • Wills. A will is the only way to be sure a partner inherits, and it can use the nil rate band well, for example by leaving a share of the home to children so the residence nil rate band is available.
  • Life cover in trust. A policy on each partner’s life, written in trust for the other, can fund the tax without adding to the estate. See life insurance written in trust.
  • Regular gifts from income. Section 21 exempts gifts that are part of normal expenditure, made out of income and leave the giver able to maintain their usual standard of living. Paying towards a partner’s living costs from surplus income can qualify. See IHT exempt gifts.
  • Larger lifetime gifts. These drop out after seven years, with taper relief on any tax between three and seven years. Note the capital gains tax position too, explained in capital gains for unmarried couples.
  • Marriage or civil partnership. The simplest route to the spouse exemption, the transferable bands and stepchildren qualifying for the residence nil rate band.

What mistakes come up most often?

  • Assuming a long relationship is treated like marriage. It is not.
  • Believing a jointly owned home falls outside the estate because it passes by survivorship.
  • Expecting a partner’s children to qualify for the residence nil rate band.
  • Relying on intestacy, which leaves a partner to bring a court claim within six months of the grant.
  • Not claiming a discount for a jointly owned property share where the co owner is not a spouse.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.