As solo living becomes more common, unmarried people should plan ahead to reduce the tax burden their beneficiaries could face.
More people are living on their own. Office for National Statistics (ONS) data shows that 8.6 million people in the UK did so in 2025, compared with 7.7 million in 2015. Single-person households made up 29.5% of all households in 2025, up from 28.6% a decade earlier.
Living alone leaves people more vulnerable when essentials become more expensive, particularly food, energy and transport.
Research from investment platform Hargreaves Lansdown found that single people spend 8,100 a year on housing, bills and groceries. Couples spend 7,800 per person.
Single people can lose out on valuable inheritance tax (IHT) reliefs, leaving their beneficiaries with a larger bill. Divorcees and cohabiting couples may face the same problem.
Ed Wood, financial planning director at wealth management firm Rathbones, said: "Inheritance tax can produce very different results depending on a person's relationship status.
"Compared with married couples who hold similar assets, single people, divorcees and cohabiting couples may pay more because they cannot access some of the same allowances and exemptions."
Why single people, cohabiting couples and divorcees may face higher inheritance tax bills
The inheritance tax owed after your death depends on the total value of your estate, including your property, possessions and money.
If your estate is valued below 325,000 - the nil-rate band - you will not owe tax, although some people may qualify for additional allowances.
Giving your home to your children - including stepchildren, adopted children, or foster children - or to your grandchildren can qualify you for an additional residence nil-rate band of up to 175,000. That raises the nil-rate band to 500,000, provided the estate is worth less than 2 million.
If you're married or in a civil partnership, any unused nil-rate band and residence nil-rate band can pass to your surviving spouse or civil partner.
As a result, some estates worth up to 1 million can be inherited without paying IHT.
You can also leave your estate to your spouse or civil partner without paying IHT, thanks to the spousal exemption.
Single people, divorcees and cohabiting couples do not receive the same treatment.
How it works in practice
If youre single
This means single people may have far less to pass on free of IHT.
A single person who has no child, stepchild, or foster child receives only the basic 325,000 nil-rate band on death.
Any part of the estate above that amount will generally face the standard 40% inheritance tax rate.
For a single person with children, the tax-free amount would be just 500,000.
Cohabitees
Living together without marrying can mean losing access to higher IHT allowances.
When one partner in a childless cohabiting couple dies and leaves the estate to the other under their will, IHT would generally apply to the portion above the first 325,000.
The surviving partner cannot claim the spousal exemption or use any nil-rate band left unused by their partner.
As a result, the inheritance tax bill may be large enough to force the surviving cohabitee to sell the family home.
Ben Glassman, head of family and managing partner at the leading UK wealth management firm Evelyn Partners, warned that an unmarried partner who inherits a property - or part of one - worth well above the deceased's available nil-rate band may need to sell the home or borrow against it to pay the tax.
Even when IHT on property may be paid in instalments, a family with little available cash can still face serious financial and emotional strain while calculating the liability and arranging payment to obtain probate during estate administration.
From April 2027, changes to the tax system will put single people, cohabiting couples, and divorcees in an even tougher position.
From this date, unused pensions will count as part of an estate for IHT purposes. Any remaining funds passed to a spouse or civil partner will qualify for the spousal exemption; cohabiting partners will not.
How can single people and divorcees reduce their inheritance tax bill?
Two practical options can help soften the IHT hit: give money away during your lifetime and make a will. Done properly, lifetime gifting reduces the value of your estate while providing financial help to loved ones - and you can be there to see them benefit from it.
However, if your gifts exceed the inheritance tax allowances, do not assume the seven-year rule works as many people believe.
A properly drafted will can direct assets to the intended beneficiaries and, in some cases, reduce your IHT bill.
Naming a charity in your will can reduce inheritance tax. Leave it at least 10% of your net estate, and the rate on the rest may fall from 40% to 36%.
Unmarried couples who live together could marry or enter a civil partnership to access the related tax advantages. They should also consider gifts made during their lifetime and make sure both have wills.
Check that your pension providers have received an up-to-date beneficiary nomination form, also called an expression of wish form.
It tells them who you want to inherit your pension instead of leaving the decision to the pension trustees or administrators.
Wood, from Rathbones, said: "Estate planning should be done proactively.
"Some people concentrate on giving money away during their lifetime, helping extended family, or leaving something to charity."
A considered plan can direct your assets where you want them to go and reduce avoidable tax.
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