RNRB - time of occupation

Trusts Discussion
1

I have a deceased client with a large estate, his will included a NRBDT and residue to spouse. There are significant cash assets (but estate less than £2m so no taper) and it is intended that the cash assets will pass into the NRBDT with reside to spouse. The property would therefore also form ‘residue’ and pass to the wife, thus TRNRB for use on wife’s subsequent demise.

The deceased retained the full ownership of the family home throughout marriage (I stress we did not advise on lifetime planning) and now, at time of his death, his wife is in residential care. As the property is not needed, the executors intend to sell the property during the period of administration for ease. However, as I would see it, this would mean that the wife could never be eligible for RNRB in her own right, as she would never have owned property.

If, however, once probate is granted, the property is transferred to her for a period of time (no matter how brief) then as is it a property that she once lived in, though at that time she did not own it, do you think that it would make her estate eligible to claim the RNRB for her, along with the TRNRB for late husband. (Her estate will pass to linear decedents on her demise).

There is reference in the RNRB notes for the need for an eligible property to have been lived in by the deceased at some time, but I can’t find anything to say that it had to be ‘owned’ at the time of that occupation. Is this just inferred?

Does anyone think that it is worth taking the step of transferring the property to the wife before sale (and suffering the costs to the estate of the first registration that comes with it), with an attempt to argue with HMRC that the RNRB applies on her death along with the TRNRB? Or, does anyone feel that HMRC are unlikely to accept the claim as her occupation was before her ownership and I am clutching at straws?

Any comments much appreciated!

Claire Horowitz

Askews Solicitors

2

In terms of securing a RNRB for the widow, I do not see any advantage in assenting the property (legally or even just equitably) to her before an intended sale. The question you highlight is most helpful: must the property have been owned at the time of its occupation?

Downsizing could become applicable. However, a qualifying residential interest requires there to have been at some point a “residential property interest“. Such an interest requires the dwelling-house to have been the person’s residence at a time when [my italics] the person’s estate included an interest in the dwelling house.

There seems to have been no such co-incidence of residence and interest during the marriage; and none since the death.

For the necessary co-incidence to become achievable, the widow would have to take up actual occupation of the property. If one takes cases concerning the principal private dwelling house exemption under s.222 of the TCGA 1992 as a guide (e.g. Goodwin v Curtis 1998), it seems actual occupation with some expectation of continuity would be expected.

Mark Walker
Anglolex Ltd.