The number of people living alone is rising. The latest data from the Office for National Statistics (ONS) reveals 8.6 million lived by themselves in the UK in 2025, up from 7.7 million in 2015. This equated to 29.5% of households in 2025 and 28.6% in 2015.
If you live alone, you’re more exposed to rising essential costs such as food, energy bills and transport.
Single people spend £8,100 a year on housing, bills and groceries, compared to £7,800 per person for couples, according to research by investment platform Hargreaves Lansdown.
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But it’s not just ongoing costs that can be more expensive for singletons.
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When it comes to inheritance tax (IHT), single people can miss out on significant tax breaks, potentially leading to higher bills for their beneficiaries. Divorcees and cohabitees suffer from a similar treatment too.
Ed Wood, financial planning director at wealth management firm Rathbones, said: “The inheritance tax system can produce very different outcomes depending on an individual’s relationship status.
“Single people, divorcees and cohabiting couples may face a larger inheritance tax bill than married couples with comparable assets because they do not benefit from some of the same allowances and exemptions.”
How inheritance tax can be higher for singletons, cohabitees and divorcees
Whether an inheritance tax bill is due depends on the value of your estate – your property, possessions and money – when you die.
If the value of your estate is worth less than £325,000, known as the nil-rate band, there’s no tax liability, however some people are entitled to extra allowances.
If you give away your home to your children (including stepchildren, adopted children and foster children) or grandchildren, you receive an additional residence nil-rate band worth up to £175,000, taking your nil-rate band up to £500,000, if the estate is worth less than £2 million.
If you’re married or in a civil partnership, you can transfer any unused nil-rate band, as well as the residence nil-rate band, to a surviving husband, wife or civil partner.
This means, in some cases, estates worth up to £1 million can be passed on IHT-free.
On top of this, you can pass your estate to your partner when you die free from IHT through the spousal exemption.
These benefits aren’t afforded to single people, divorcees or cohabitees though.
How it works in practice
If you’re single
It effectively means single people miss out on a significant boost in the amount they can pass to beneficiaries without them having to pay IHT.
For example, a single person without a child, stepchild or foster child, receives just the basic £325,000 nil-rate band upon death.
Anything in their estate worth over this figure will usually be taxed at the standard 40% inheritance tax rate.
Meanwhile, a single person with children would only be able to pass on £500,000 free from IHT.
Cohabitees
Cohabiting couples can also miss out on increased IHT allowances.
If a person in a cohabiting couple without children dies and wants to pass their estate to the other, as laid out in their will, IHT would typically be owed on anything over the first £325,000.
This is because the surviving partner does not benefit from the spousal exemption and any unused nil-rate bands.
This tax treatment can leave the surviving cohabitee facing a significant IHT bill, potentially needing to sell the family home to pay for it.
Ben Glassman, head of family and managing partner at leading UK wealth management firm Evelyn Partners, explained: “If an unmarried partner is left a property, or a share of a property, worth significantly more than the deceased’s available nil-rate band, they could potentially have to sell or borrow against the home to meet the tax.
“While IHT can in some circumstances be paid by instalments where property is involved, the need to calculate and arrange payment of the liability as part of the estate administration process – in order to obtain probate – can still create considerable financial and emotional pressure for a cash-poor family.”
Changes to the tax landscape from April 2027 will make the situation worse for single people, cohabitees and divorcees.
What can you do to lower your inheritance tax bill?
There are two things single people and divorcees can do to mitigate the IHT blow – lifetime gifting and making a will.
Lifetime gifting, when used correctly, can lower the value of your estate and give loved ones a financial boost while you’re still alive to see them enjoy it.
Wills can also ensure assets go to the right beneficiaries, which can lower your IHT bill in certain circumstances.
For example, if you name a charity as one of the beneficiaries on your will and leave at least 10% of your net estate to it, the IHT rate on the remaining estate can decrease from 40% to 36%.
Cohabiting couples can get married or enter into a civil partnership to benefit from the tax advantages that come with it, explore lifetime gifting and ensure they have wills set up.
It’s recommended you ensure your nomination of beneficiary forms, sometimes known as expression of wish forms, have been returned to your pension providers and are up to date.
These forms tell providers who you want to inherit your pension, rather than leaving it to the discretion of the pension trustees or administrators.
Wood, from Rathbones, said: “Proactive estate planning is especially important.
“Many choose to focus on gifting during their lifetime, supporting wider family members, or incorporating charitable giving into their plans.
“Taking a deliberate approach can help ensure your wealth is distributed according to your wishes while minimising unnecessary tax.”