FW: Nil Rate Band: death of first spouse during Estate Duty régime

This is not an area with which I am as familiar as I would wish, and would appreciate comments and assistance from those in the Forum who specialise in the NRB transfer area.

In a case where a widow died in 2017, is her estate entitled to a full IHT Nil rate Band Transfer from her husband’s estate whose nil rate band under Estate Duty was used up in
1972? He died in November, 1972.

I believe that there were posts on this topic in relation to non-domiciled first spouses dying during IHT transferring NRBs to domiciled survivors, but would appreciate a refresher
given the slight difference in dates and tax régime.

The NRB for Estate Duty was £12,500 in 1972, and there was no spouse exemption available at that time.

I think that the question might be reduced to the following:

  1. Does s.8A amended by

    Finance Act 2008, s 10
    Sch 4, paras 1, 2
    . simply consider the transferable nil rate band for IHT purposes to be the full IHT amount in the case where the first spouse died during the estate duty régime?

  2. Assuming that it does, does VT in the formula need to be reduced by £12,500 or not?

  3. certainly seems to be the case, as deceased non-domiciled spouses can transfer their, by definition, unused NRB by a hospital pass to the survivor whose estate can then use

I am seeking an honourable way out for HMRC in a usufruct “locked horn” situation before taking them to the Court of Session.

Thank you for any comments and assistance.

Peter Harris


It seems that the amount transferable on a death in 1972 is limited to the unused estate duty Nil Rate Band, and is not increased to the IHT NRB.

Any uplift in the past has been in the area of will trusts where the nil rate band left has increased between the date of the will and the date of the settlement on death

Any other thoughts?

Peter Harris
Overseas Chambers

My understanding is that a limited spouse exemption of £15,000 was introduced to Estate Duty from 22 March 1972 by FA 1972 s 121. Previously there was an exemption on the second death if the widow(er) was life tenant, not competent to dispose and that exemption is preserved through CTT to IHT. It is the unused proportion of the nil rate band, if any, that transfers. A few years ago it was reported that widows of fighter pilots killed in the Battle of Britain had benefited from transferred nil rate bands as their husbands’ estates were exempt from Estate Duty by virtue of the killed in war exemption. As Peter says, nil rate band may transfer from the estate of a non-domiciled predeceasing spouse with no UK assets.

Terry Jordan

And by November 1972 the threshold was also £15,000.

Terry Jordan


As I understand it, a spouse exemption of £15,000 was introduced in March 1972 and the Estate Duty threshold for November 1972 was also £15,000.

Alexandra Taylor
Botvyle Consultants

Thank you all for your confirmations, assistance and comments. Much appreciated. There seems to be no scope for attributing a full £325,000 NRB on the death of the second spouse under s.8A ITA, 1984, despite that NRB functioning as an absolute right in other circumstances to relieve small to medium estates.

Peter Harris
Overseas Chambers