Transferable Residential Nil Rate Band

( #1

I am currently dealing with the estates of husband and wife who died earlier this year. Mrs died first in January leaving a modest estate (other than small specific legacies) to her husband. Mr died in early April. His estate is in the region of £890k.

The family believed that the property they lived in was held in joint names. However, it has now transpired that it was held solely by the husband.

The question posed to HMRC was whether we would be still be able to claim the unused Residential Nil Rate Band from the wife, even though she did not own any property. HMRC stated that we could not because she had not owned a property and therefore wasn’t entitled to the RNRB. Our contention was that we should be able to claim the TRNRB as it was unused and that if she had died in 2016 we would be able to claim it regardless of this.

Form IHT436 makes no mention of owning a property being necessary to claim the additional exemption (whereas IHT435 does).

The ability to claim the TRNRB would reduce the potential IHT bill by about £40k.

What are members’ thoughts on this?

Thank you in advance

Chris Shaw
Graysons Solicitors

(Jeremy Crouch) #2

Section 8F of IHTA 1984 seems to deal with this. See below.

Residence nil-rate amount: no interest in home goes to descendants etc.


Subsections (2) and (3) apply if the person’s estate immediately before the person’s death—

(a) does not include a qualifying residential interest, or
(b) includes a qualifying residential interest but none of the interest is closely inherited.


The person’s residence nil-rate amount is nil.


An amount—

(a) equal to the person’s default allowance, or
(b) if E is greater than TT, equal to the person’s adjusted allowance,

is available for carry-forward.

Jeremy Crouch

(malcolm.gunn) #3

Tell HMRC to read sections 8F(1) and (3) IHTA 1984.

Malcolm Gunn

M B Gunn & Co Ltd

(Richard Whitaker) #4

You are quite correct - HMRC should perhaps read their own guidance at IHTM46040 (particularly the last paragraph)!

Richard Whitaker