How do you apportion the tax liability between two estates?

I am dealing with the administration of an estate whereby he had a life interest in half of a property by his late wife who predeceased him in 1980s. I understand that the trust is aggregated with his free estate in order to calculate IHT. I understand that NRB/TNRB/RNRB/TRNRB are then applied and the tax liability is apportioned between the trust and the estate. Please can someone tell me that is correct and let me know how the liability is apportioned? Is it simply based upon the value in the trust (i.e., the half share of property) divided by the value of the trust and free estate x by the liability?

Presumably then the trustees are liable for the tax on behalf of the trust?

Thanks for your help

Charlotte Otton
Slater Heelis

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Basically you are correct. The so-called “free estate” of the deceased (eg 600K) is added to any “estate interest in possession” (eg 300k) to give estate of 900k (less NRN/RNRB and transferable amounts) then chargeable to IHT at 40%.

Assume, say, NRB 325K plus RNRB 175K ie 500k.

900k less 500k taxed at 40% gives 160k.

Estate rate is 160k/900k ie 17.7778%.

IHT payable by trustees is 300k x 17.7778% gives 53,334.

Or alternatively [300k/900k] x 160k gives 53,333,

Malcolm Finney

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