just checking my understanding is correct. Have an estate worth 900K which contains a residential property worth 100K (that has been occupied at some time as residence of decd). The property is not left as a specific asset but forms part of the residue. Residue is 25% spouse, 25% son, 25% disc trust and 25% to grandchildren who attain 25 (but at death they are under 25). I assume max RNRB claimable is 25K i.e. 25% of the 100K. Died more than 2 years ago so not possible to appoint out of the DT. Thank you
I agree. The contingency interest is not inherited given at the date of death it was not satisfied.
Malcolm Finney
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Thank you. Unless I have missed something (in which case I hope someone will correct me, with an explanation) my conclusion is different, namely that the RNRB which can be claimed is £100K (not £25K as suggested above).
The RNRB is capped at £100K because that is the extent of the residential property interest. The property forms part of residue and, ignoring the grandchildren, more than 100K is closely inherited (i.e. the son’s entitlement circa. 900K/4= £225K).
The lower of £225K and £100K is £100k therefore that’s the available RNRB.
As I say, please let me know what I have missed if that conclusion is wrong.
I understand that it is because although the property is valued at 100K the maximum RNRB is limited to the value of the QRI that is closely inherited. As the son is only entitled to 25% of the residue under S8E only 25K is attributable to the QRI and so this is the maximum claimable.
There is an example in this article under 8.7
On my reading of paragraph 8.7, I agree with Andrew Jones that the full £100k RNRB is available.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
Hi Paul. In para 8.7 the first example is an estate worth 1 million with a QRI worth 500K with 2/5 to son and so 200K is the value of the QRI inherited hence they get the 100K RNRB (as the 2/5 of the QRI is more than enough to cover this) but the example then goes on to say that if the property were worth only 200K the RNRB would be restricted to 2/5 of this ie £80K, So in my example because the house is only worth 100K I am thinking the RNRB has to be restricted to 25% of this i.e. 25K
Yes, having looked again at para 8.7 I recognise my error and in now agreeing that RNRB will be limited to only £25k, retract my previous comment
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
The maximum relief available is reduced if the relevant property interest which qualifies for relief is lower; hence £25,000.
Malcolm Finney