Failure to Claim Transferable Nil Rate Band

If Lay Executor has failed to claim transferable nil rate band within 2 years - what is the effect?

KATHERINE MELKERTS
Firm: Melkerts Solicitors

HMRC has the discretion to accept a claim out of time, provided that the reasons given are considered a “reasonable excuse”.

I would suggest you see if HMRC will exercise its discretion in the particular case in question.

Paul Saunders

Presumably the unclaimed transferrable nil rate band is lost.

Which raises an interesting point for professional executors. Should the transferrable nil rate band always be claimed, even when there is no apparent need, just in case assets are discovered later that would otherwise push the estate into IHT?

Would this remain true even when claiming the apparently unnecessary TNRB would result in higher costs (IHT400, ordering documents, investigation of previous estate, etc) in the administration (and therefore less for the residuary beneficiaries)?

Taurean Drayak
Elliot, Bond & Banbury

I agree with Taurean that personal representatives, especially professionals, should consider claiming the transferable NRB (TNRB) even where at the time of death there is no apparent need.

However, it is probably not appropriate to incur the expense in every case, perhaps looking only to those estates where the disclosed taxable value of the estate is within, say, £100,000 of the available NRB, or there is doubt as to the valuation of some of the assets (or ability to claim IHT reliefs).

In some instances, the time and costs involved in tracing the necessary information to support a claim (say, the deceased spouse/civil partner was a non-UK domiciliary at their death) could be disproportionate to the perceived benefits, in which case the PRs should perhaps more closely question the beneficiaries/informants and make detailed notes of such further enquiries in case of a complaint that the TNRB should have been claimed, with the notes being held in a file likely to be retained beyond when the usual correspondence file might be destroyed.

It might also be appropriate to keep a similar note in all cases where the TNRB is not claimed, so that there is evidence the PRs considered the matter and their reasons for not claiming.

Paul Saunders

I presume from your replies that it is therefore possible to claim an un-needed TNRB, that HMRC will entertain this without something for the TNRB to ‘bite’ upon?

I have an estate where the trustees are considering an appointment of funds out of a NRB discretionary trust, to non-exempt beneficiaries, within the first 2 years of death. I would like to claim the TNRB before making the appointment for the avoidance of doubt given the tax otherwise triggered. It is also the TNRB of the deceased’s former wife, the deceased was widowed and then died re-married to my client.

My client is prepared to meet the costs of an IHT400.

Alex Jenkins
Toller Beattie LLP