The Nil Rate Band is now transferable between spouses and civil partners. This has not increased the total amount a couple can give away i.e. currently £325,000 x 2, but it does enable the surviving partner to give away £650,000 on the their death (whereas previously it was only the single nil rate band on the second death and in many cases the Nil Rate Band was wasted on the first death).

But this extra allowance can be wasted if your new partner also dies, because you can only add an extra 100% of the Nil Rate Band to your own.

The following applies to civil partners as well as married couples.

If you have re-married after having been widowed, the £325,000 Nil Rate Band carried forward from your first partner could be lost if your second marriage ends in death (as opposed to a divorce) with your surviving partner inheriting everything.

Similarly, your additional Nil Rate Band can be wasted if your new partner also dies, because you can only add an extra 100% of the Nil Rate Band to your own.

The way to avoid losing the ‘bonus’ Nil Rate Band is, on your second marriage, to both write Nil Rate Band Discretionary Trust Wills, thus allowing you to shelter £975,000 from Inheritance Tax between you. This is made up of £325,000 from your first spouse, your own allowance of £325,000 and your new spouse’s £325,000 allowance.

Obviously if both you and your new spouse have previously been widowed then each can shelter up to £325,000 x 2 from Inheritance Tax. As of today a maximum of £1.3m of assets can be given away free of Inheritance Tax when both have died by using Nil Rate Band Discretionary Trust Wills.

But remember, the uplift in the Nil Rate Band on 2nd death is not automatic and has to be claimed (and the amount of Nil Rate Band used on first death has to be proved).