H died in 2023 and W died in 2022. Post W’s death, but prior to H’s death, the matrimonial home was sold (for £615k). H leaves an estate worth £1.3m, half of which passes to the daughter (direct descendant); he rest goes to nephews and nieces. I believe that the downsizing addition will be calculated by totalling the residential enhancement (RNRB of £175K) with the brought-forward allowance (“TRNRB” also of £175K on my facts).
As the QFRI was worth more than the sum of these, the lost residential amount (LRA) at H’s death will be the full £350K. The downsizing allowance is then equal to the LRA because the LRA is less than the 50% of the chargeable estate which is closely inherited (£600K).
A question has been raised as to whether the relief will be capped since only 50% of the residue is closely inherited. Having spent more time than is reasonable in trying to interpret the rules, I believe the answer is “no” and that this issue is only relevant when the property itself forms part of residue (so not with downsizing). As the closely-inherited portion of the estate exceeds the total maximum relief, I think I can claim the full £350K but I would welcome confirmation from others.
Also - please reassure me that I am not the only person that still finds the RNRB legislation, terminology and general situation impenetrable!
