Appointment of IOU in favour of NRBDT owed by Spouse's Estate Same Beneficiaries

[LegalBeagle]

@jenyapp

H’s Trustees waive the RPI Indexation

Hi Jen,

Please see below link regarding deducting liabilities that are not repaid from the estate:

IHTM28029 - Liabilities: restricted deductions: non-repayment of liabilities...

Regarding whether or not the RPI indexation is interest, see the discussion here regarding whether RPI indexation is interest for income tax purposes:

RPI/Indexation - when can it be called in?

I think that HMRC would disagree with you, Jack. See here: (I love the headline it makes it seem that HMRC’s opinion is the last word on the topic.) But even if it’s not interest it is likely to be disguised interest (ITTOIA 2005 s 381A).

Whilst not directly relevant, it may offer some ideas.

Also see s.381A of the Income Tax (Trading and Other Income) Act 2005 which defines sums equivalent to interest for income tax purposes.

One could argue the fact that, at best for income tax purposes, it falls into a sum equivalent to interest shows it is not really interest.

I also think the fact that, if the will explicitly allows deduction of interest and has a provision charging interest. Then the obvious interpretation is that the clause allowing waiver of interest only applies to interest so called in the will. You may also want to check whether the will allows for partial repayment.

Yours,
The Legal Beagle