How to Manage Inheritance Tax When a Second Parent Dies (Including an Inheritance Tax Calculator)

Inheritance Tax When a Second Parent Dies (Including a Calculator)

When a second parent dies, inheritance tax (IHT) often becomes a real concern for executors and family members for the first time. This guide explains how IHT works in this situation, what thresholds and allowances apply, and how to calculate and pay any tax due.

Understanding Inheritance Tax

Inheritance tax is a tax on the estate of a person who has died. It applies to their property, money and possessions. In the UK, IHT applies only when the estate’s total value exceeds the nil-rate band (NRB), which is the tax-free threshold. The NRB is currently £325,000 and is frozen at that level until April 2031.

Anything above the threshold is taxed at 40%. However, several exemptions and reliefs can reduce or eliminate this liability.

The residence nil-rate band

In addition to the standard £325,000 NRB, a further allowance of up to £175,000 may apply. This is the residence nil-rate band (RNRB). It is available when a main home passes to direct descendants such as children or grandchildren. Like the NRB, the RNRB is frozen at its current level until April 2031.

How the First Parent’s Death Affects the Tax Position

For many families, no inheritance tax is due when the first parent dies. Two rules explain why.

Spousal exemption. Assets passing between spouses or civil partners are exempt from IHT. When the first parent dies, their estate can transfer to the surviving parent without any tax liability. Many married couples use mirror wills to achieve exactly this: each leaves everything to the other, then to their children after the last of them dies.

Jointly owned assets. Couples often hold property as joint tenants. In that case, ownership passes automatically to the surviving spouse on death, regardless of what the will says. No probate is needed for those assets at that stage.

Inheritance Tax When the Second Parent Dies

When the second parent dies, the position changes. Assets passing to children and other beneficiaries may now attract IHT. However, a valuable rule helps reduce the bill.

Transferring unused allowances from the first parent’s estate

If the first parent’s estate did not use all of their NRB, the unused portion transfers to the second parent’s estate. For most couples where all assets passed to the surviving spouse, the entire NRB transfers. As a result, the second parent’s estate can benefit from a combined NRB of up to £650,000 (£325,000 x 2).

The same principle applies to the RNRB. If the first parent’s RNRB was unused, it transfers to the second parent’s estate. A further £350,000 (£175,000 x 2) can then apply against the value of the family home on the second death. In total, a married couple can potentially pass up to £1,000,000 free of IHT when a qualifying home passes to direct descendants.

You claim the unused allowances from the first parent’s estate on the relevant HMRC forms when dealing with the second parent’s estate.

A note on pensions

Currently, most pension funds sit outside a person’s estate for IHT purposes. From 6 April 2027, however, most unused defined contribution pension funds and pension death benefits will be brought into the estate and potentially subject to IHT. This change is now law under the Finance Act 2026. If the second parent holds significant pension savings, this is worth discussing with a qualified adviser well before that date.

Valuing the Second Parent’s Estate

Many families apply for a Grant of Probate for the first time after the second parent dies. This is because, when both parents are alive, jointly owned assets pass automatically to the survivor. When the second parent dies, however, those assets must now pass to the beneficiaries named in the will, and banks and other institutions typically require a Grant of Probate before releasing funds or transferring property.

Before you can apply for probate, you must calculate and pay any IHT due. Accurate valuation of the estate is therefore essential.

What to include in the valuation

The estate comprises all assets, less any liabilities. That means:

• The open market value of any property, including the family home.
• Personal belongings, vehicles and collectibles.
• Balances in bank accounts, savings accounts and investment portfolios.
• Any outstanding debts and liabilities, which reduce the taxable value.

Paying Inheritance Tax After the Second Parent Dies

IHT is due by the end of the sixth month after the month of death. For example, if the second parent dies in March, IHT must be paid by 30 September of the same year. Interest accrues on any unpaid balance from the day after the deadline passes.

This deadline can catch executors off guard. Probate is usually needed before banks release the estate’s funds, yet IHT must be paid before probate is granted. The IHT Direct Payment Scheme allows many banks to pay HMRC directly from the deceased’s accounts before probate is issued, which helps resolve this timing problem.

Paying in instalments

If the estate includes property or other assets that cannot easily be sold quickly, you may be able to pay IHT on those assets in ten annual instalments. Interest applies to the outstanding balance in most cases. A probate solicitor can advise on whether this option suits the estate.

Which HMRC Forms Do You Need?

The forms required depend on the estate’s size and complexity.

Excepted estates. For deaths on or after 1 January 2022, the old IHT205 paper form no longer exists. If the estate qualifies as an “excepted estate” (broadly, one where no IHT is payable and the gross value falls within certain limits), you simply provide the estate’s value figures within the online probate application. There is no separate HMRC form to complete.

IHT400. Where IHT is payable, or where the estate does not meet the conditions for an excepted estate, you must complete the IHT400, the full inheritance tax account. You will need detailed information about the deceased’s assets, liabilities and any gifts made in the seven years before death. The IHT400 is also where you claim any unused NRB and RNRB transferred from the first parent’s estate. HMRC processes the return and, once satisfied, issues a reference number used to apply for the Grant of Probate.

Practical Steps for Managing the Process

Get professional advice

A probate solicitor experienced in IHT can identify every available allowance and relief, ensure the transferred nil-rate bands are properly claimed, and help you avoid costly errors. This is particularly important where the estate is large or where the second parent made significant gifts in the seven years before they died.

Gather the right documents

You will need the will, property title documents, bank statements, investment records, mortgage statements and details of any outstanding debts. Collecting these early saves time later.

Keep thorough records

Record every financial transaction, asset valuation and communication relating to the estate. Good records make the IHT400 easier to complete and simplify any subsequent queries from HMRC.

Consider estate planning while the second parent is alive

If the second parent is still living, it is worth discussing estate planning with a qualified adviser. Options such as lifetime gifts, trusts and life insurance policies written in trust can all reduce or manage future IHT liabilities. Taking professional advice early gives more options.

Inheritance Tax When the Second Parent Dies: Calculator

Use the calculator below to get a broad estimate of the IHT position. It is designed for straightforward estates and applies the standard rules for England and Wales.

Disclaimer: This calculator is provided for illustrative purposes only and is based on simplified assumptions of current inheritance tax rules in England and Wales. It does not account for all variables, including trusts, complex estates, lifetime gifting strategies, business or agricultural reliefs, or changes in legislation. The results are not a substitute for professional advice and should not be relied upon when making financial or legal decisions. For advice on your own circumstances, speak to a qualified solicitor or tax adviser. You can start with a free consultation with a probate solicitor.

This article is for general guidance only and does not constitute legal, tax or financial advice. Rules and thresholds can change, and every estate is different. For advice on your own circumstances, speak to a qualified professional. You can book a free consultation with a probate solicitor through The Probate Network.

Frequently Asked Questions

How much inheritance tax is due when a second parent dies?

It depends on the value of the estate and the allowances available. The second parent’s estate can benefit from up to £650,000 of combined nil-rate band (£325,000 x 2) if the first parent’s NRB was unused. Where the family home passes to direct descendants, a further £350,000 of residence nil-rate band may also apply, bringing the total potential tax-free threshold to £1,000,000. Anything above the available threshold is taxed at 40%.

Do I need to apply for probate when the second parent dies?

In most cases, yes. When assets pass to children or other beneficiaries, banks and other institutions require a Grant of Probate before they release funds or transfer property. By contrast, when the first parent dies and assets pass automatically to the surviving spouse, probate is often not needed for jointly owned assets.

What happens to the IHT205 form now?

The IHT205 was abolished for deaths on or after 1 January 2022. If the estate qualifies as an excepted estate (broadly, one where no IHT is due and the estate value falls within certain limits), the estate’s figures are entered directly into the online probate application. Where IHT is payable, the full IHT400 account must be completed and tax paid before probate can be granted.

Will pensions be included in the second parent’s estate for IHT?

Under current rules, most pension funds fall outside the estate for IHT purposes. From 6 April 2027, however, most unused defined contribution pension funds and pension death benefits will be included in the estate and potentially liable to IHT. This change is now law under the Finance Act 2026. If the second parent has significant pension savings, speak to a qualified financial adviser now to understand the implications.