Comedian Ricky Gervais famously revealed that he saw no point in marriage, however, after over 40 years of being together, he recently revealed that he and his partner, Jane Fallon, are now planning on marrying to avoid the significant inheritance tax (IHT) liability they will have on the first death if they take no action.
While few people marry purely for tax reasons, there are some potentially significant side tax benefits of marriage and civil partnership, particularly when it comes to IHT.
For couples who own property, businesses, farms or other valuable assets, the potential IHT savings available through marriage can far exceed the cost of the wedding itself. The combination of spousal exemptions, transferable IHT Nil Rate Bands (NRB), transferable IHT residence NRB (RNRB), and transferable Agricultural Property Relief (APR) and Business Property Relief (BPR) allowances can both defer and minimise tax while maximising the wealth to pass on to future generations.
The spouse exemption
The foundation of most IHT planning for married couples is the spouse exemption.
Assets passing between spouses or civil partners, either during lifetime or on death, are generally exempt from IHT. This means a married couple can transfer substantial wealth between themselves without triggering an IHT charge.
The position is very different for unmarried couples. If one partner leaves assets to the other, IHT may be triggered if the estate exceeds the available allowances.
The spouse exemption enables married couples to retain flexibility and defer IHT until the second death occurs, when broader estate planning opportunities can be considered.
This can be seen in the marriage of Sir Ken Dodd and Anne Jones in 2018. They married two days before his death after a 40-year relationship. On his death, if his estimated £7.2m estate passed to Anne, it would have qualified for spouse exemption and there would have been no IHT. If they hadn’t married and his wealth has passed to Anne, spouse exemption would not have been available and she would have had an estimated £2.75m IHT bill.
Transferable NRB and Residence NRB
Every individual currently has a NRB of £325,000. This is the amount that can pass on death free of IHT.
One of the most valuable benefits of marriage is that any unused proportion of the first spouse's NRB can be transferred to the surviving spouse or civil partner. Where assets pass to a spouse on the first death, they are exempt from IHT and as a result, the IHT NRB on the first death remains unused.
As a result, when the surviving spouse later dies, their executors may be able to claim both their own NRB and their late spouse's unused NRB, providing a potential combined tax-free threshold of currently up to £650,000.
This tax-free threshold could increase by £350,000 (2 x £175,000) to £1m in total if the qualifying conditions for the full RNRB are satisfied.
These valuable benefits are not available to unmarried couples, regardless of how long they have lived together.
Agricultural Property Relief (APR) and Business Property Relief (BPR)
For many farming and business families, the most significant recent tax change has been the restriction of 100% APR and BPR from being unlimited to £2.5m for post 5 April 2026 deaths. Importantly, any used 100% APR/BPR on the first death is also transferable between spouses.
This means that where the first spouse dies without fully using their available £2.5m 100% APR/BPR, the unused percentage can generally be transferred and claimed on the second death.
As a result, a married couple may potentially benefit from up to £5m of 100% APR/BPR relief, regardless of whether the qualifying agricultural or business assets were owned by the first spouse or the second spouse.
This is potentially a significant benefit because it allows married couples to plan their estates as one economic unit rather than considering each spouse's ownership in isolation.
Why this matters for farming and business families
Many farms and family businesses are operated jointly, even where legal ownership is held predominantly by one spouse.
In the absence of the ability to transfer unused relief on the first death there would be a risk that all or part of the £2.5m 100% relief could be wasted if the first spouse died without owning qualifying assets of a sufficient value.
The ability to transfer the unused 100% APR/BPR enables the surviving spouse's estate to benefit from it in addition to their own £2.5m 100% relief on the second death, provided the relevant qualifying conditions are satisfied.
Marriage creates greater planning flexibility
The true advantage of marriage isn’t simply the IHT reliefs themselves, but the flexibility they provide.
Married couples can:
- Transfer assets freely between themselves using the spouse exemption.
- Preserve and transfer unused NRBs and RNRBs.
- Transfer unused 100% APR/BPR.
- Undertake long-term succession planning as a couple rather than as two separate individuals.
- Provide financial security for the surviving spouse while preserving wealth for the next generation.
For business owners and farming families, this flexibility can be particularly valuable when factoring in business, family, financial and tax matters.
Wedding costs pale in comparison to potential tax losses
A wedding costing £30,000 may seem expensive but while marriage should never be driven solely by tax considerations, it continues to provide often invaluable IHT and other tax benefits.
The spousal exemption allows wealth to pass freely between spouses. The transferable NRB and RNRB can increase a couple's combined tax-free threshold to £1m. Further, the ability to transfer unused APR and BPR allowances means that married couples may potentially benefit from up to £5m of 100% relief for qualifying agricultural and business assets.
Viewed over a lifetime, the cost of a wedding can seem relatively modest when compared with the value of the IHT protections that marriage can provide. For farmers and business owners, marriage and IHT may well be a match made in heaven.
How we can help
Our Private Client team advises individuals, families, farmers and business owners on inheritance tax and succession planning, including the reliefs and exemptions available to married couples and civil partners.
If you have any queries about inheritance tax planning, Agricultural Property Relief, Business Property Relief or passing wealth to the next generation, please contact Debbie Brown or a member of our team.