There has been a fair bit of head scratching on this and we have even sought counsel opinion but would like to seek some others please. I have an estate with a house worth £160k on H’s death 2017. W died 2010 and a NRBDT was set up with a charge on the house of her half share of £70k.
So, we can claim her TRNRB of £100k, being the default allowance. We can also claim H’s RNRB of up to £100k, so giving a maximum available of £200k, subject to the value of the house.
Could others please let me have their views on the following:
- My belief is that the maximum available RNRB is in my scenario, however, £90k., Being the £160k value of the house less the £90k charge. Would others agree?
- On an academic point, I am also of the belief that if the charge was not in existence and they each owned a half share then the maximum available RNRB would be limited to the value of the house at £160k. This is the case regardless of the fact that W had £100k default allowance under S8G(4) IHTA1984 and H had £80k of his own RNRB. As you cannot have more RNRB than you have value in the house!!! My firm understanding right from the beginning of this debacle was that you could not have more RNRB than you had house and IHT manual IHTM46020 backs this up…‘To calculate the RNRB…the first step is to establish the maximum RNRB…including any transferred RNRB…The second step is to establish the value of the QRI…The amount of RNRB available to the estate is the lower of these two values’ - https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm46020
- Finally, there appears to be a contradiction between IHTA 1984 S8G(4): - http://www.legislation.gov.uk/ukpga/1984/51/section/8G - and the IHT manual on this point. As the legislation says that if the first death occurred before 06/04/17 then the default allowance is £100k that can be transferred for use on second death. The first example given at IHTM46041 on this matter says that the default allowance when first death was in 2015 is £150k!! Am I right that this is a contradiction and the IHT manual is wrong on this point?!?!? –
SIGH!!! Thanks in advance!
Ware & Kay