H and W owned a house a tenants in common with form A. Mirror Wills were drafted in 2005 (before TNRB) each leaving their “beneficial half share” in the property to 2 children" as “absolute gifts” with the residue of the estate to the spouse. There appears to be no mention of a IPDI or trust. Executors were named as the 2 children and spouse.

Upon W passing in 2016, probate was granted in H name only. No change was ever registered with the Land Registry- No title change or trustees appointed. And so I believe, leaving H as sole legal owner, and holding the property on trust for himself and the beneficiaries?

Children/ beneficiaries never took up residence, paid bills or received rent from H who continued to live in the property until death recently.

Looking over IHT100 and available schedules I am going mad second guessing myself, I am somewhat confused as to the extent of H estate and would be grateful for any confirmation or insight as this is not my field. In particular:

-How much of the property is part of the H’s estate for IHT? His half share or the whole as he continued residence and beneficiaries took no ‘control’?

  • Is the property in this case deemed a “jointly owned asset” and therefore should be presented on IHT 404 detailing the value of the deceased share at the date of death?

-I am second guessing if the property is deemed “settled property” and must be presented in IHT 418, although the will does not explicitly mention IPDI or trust, in the circumstance is a trust, life interest or IDPI implicit?


There is no settlement (so no need for an IHT100) and no GROB as H did not make a gift. The house is not a jointly owned asset and I don’t see any cause to impute an IIP in W’s share.
H’s estate just contained a half share of the house.

However, an IIP for H remainder to the 2 children might be a good idea. If the 2 years are still running a retrospective variation for CGT (if not IHT) could ensure that no PPR is ever lost. If H has no plans to move out, a sale would perhaps be remote so the children will not for some time, possibly not even until H dies, realise their inheritance anyway. Unless, sharper than a serpent’s tooth, they opt to chuck him out and sell, which the court might well not order under ToLATA 1996.

The variation will operate in the real world and the value of the half share would not be exposed to care fees, like any third party settlor’s trust fund (the children are the settlors in the real world). It does expose the children’s estates to IHT on H’s death which may not be beneficial, even though postponed until then. If W’s NRB covers the specific gift to the children, it may be that for IHT the variation will not be elected as retrospective for IHT only CGT. On the other hand if it is elected, on H’s death he will apparently have his own and W’s RNRB and TRNB. Up to £1m tax free depending on future changes in the law and likely property value at H’s death.

The children will be able to settle their reversions on their own children tax-free, bypassing a generation as regards half the value of the house. H could make a PET at any future date when it is tax-efficient (since it will not be at risk for care fees as he does not own the capital, at least if there is no power to appoint it to him).

All the above is as a result of W not leaving everything to H either for life or outright. I would not positively advise a couple to leave their main residence or part to their children, though of course, after explaining why, I would accept their instructions, if confirmed by them in writing.

Jack Harper

On H’s death his estate will will comprise the 50% he owns absolutely in the family home plus any residue he inherited earlier under W’s will. His estate will be entitled to its own RNRB assuming his children inherit his 50%. However, no TRNRB from W’s estate seems likely as W left her 50% to the children.

Assume for discussion purposes the home was worth say 500k and assume residue is nil.

On W’s death her chargeable estate will be 250k less 175k [RNRB} less 75k [of her NRB].
IHT therefore will be nil with a TNRB of 75/325 ie 23% unused NRB.

On H’s death his chargeable estate will be 250k less 175k [RNRB} less 75k [of his total NRB of 325k plus 23% of 325k].
IHT therefore will be nil.

For CGT purposes there will be a CGT uplift on both W’s death on her 50% ie no CGT charge.
Similarly on H’s death. However, as the children do not occupy the home, a CGT charge will arise on a future sale by the children of their 100% holding with the base cost equalling the MV of W’s 50% on her death plus the MV of H’s 50% on his death. Thus, no PPR relief.

Looking at Jack’s suggestion if I understand his comments correctly then:

On W’s death the 50% she leaves to the children is settled by the children on an IPDI for H. This gives rise to an inter-spouse transfer and no IHT charge arises on her estate. In addition, W’s estate will not have an entitlement to its own RNRB.

On H’s death his estate comprises his 50% in the home plus the IPDI, say, 500k. However, his estate is entitled to its own RNRB plus a TRNRB from W’s estate ie total of 350k plus H’s own NRB and W’s TNRB ie no IHT on H’s death.

By adopting the “IPDI approach” any IHT which would be due if my figure for value of the home was much higher would effectively push the date any IHT would actually be payable further in to the future securing a cash flow advantage.

For CGT purposes there will be a CGT free uplift on W’s death re her 50%. On H’s death there will be a CGT free uplift on his 50% and also such an uplift on the IPDI’s termination. Thus, under Jack’s suggestions, as and when the children inherit the home on H’s death no CGT exposure will have accrued to the children.

No doubt Jack will correct me if I have misunderstood his comments.

Malcolm Finney


Exactly so, plus more insights. I didn’t want to say much more because we had no figures and my reply was not actually addressing the query. My reply was thus directed not only at the querist, who may well have it all in mind, but our wider readership.

Jack Harper

Thanks Andrew. That was what I was hoping. In that case H’s half share can simplify be detailed on IHT 405 (Houses, land, buildings and interests in land) as the deceased residence?

Thanks both Malcolm and Jack for your respective insights.

On this occasion as W died in late 2016, no RNRB could have been used upon the absolute gift of beneficial half share of the house to her children.

And so is now transferable to H given the ability to claim it retrospectively. As H’s RNRB is 175k the residential enhancement available from W should also be 175k and so 350k in total. Plus 325k NRB= 675k available to H.

As I understand, upon quick sale of the property the children will incur a CGT charge on the half share inherited from W in 2016 only.

I believe a variation was discussed upon W’s death, redirecting her half share to H from the children, but unfortunately it was never signed by the children as H drafted it himself.

yes, that would be my view

I also had this scenario, and have submitted IHT400 etc and obtained probate (although no IHT clearance as yet). As deceased only owned her own 50% of the property, I included it in the Joint Assets schedule, and I have also applied to 10% reduction. As it is only 50% owned by the deceased, how can it only be included on the IHT404? Surely it is a joint asset?
I am happy to be corrected, or have it explained to me in simple terms - I often also find I tie myself in knots with these forms and the correct details to input on which section of the form! To have this clarified would be a huge benefit.

Yes indeed Helen. Whilst I appreciate Andrew and others comments on the issue and do not presume to question, as far as I can read the advice on this Forum is conflicting/ confusing on this issue and so any simple clarification would be helpful.

In the initial scenario posted whereby W leaves beneficial half share of property, held has tenants in common, to children, but does not update the title register leaving himself as the sole legal owner but only beneficially owning his share of the property, which IHT400 supplementary form should H’s share upon death be detailed in? IHT 404 as it a joint asset? IHT manual describes joint property as below:

IHTM15011 - Joint property: What is joint property?

‘Joint property’ is a common term for arrangements under which the beneficial entitlement to property is shared between two or more people. Usually the property will be held in the joint names of these people. But, sometimes property may be held in someone else’s name as a trustee or nominee for the people who share the beneficial entitlement to the property.

So surely H share is deemed joint property with the children who have a beneficial interest, and therefore must be stated in IHT 404, with the half share figure( with appropriate discounts) input in to IHT400 Box 49 only.

However stated on IHT 404- if the joint assets include houses, land or buildings you will also need to fill in IHT405 to provide a full description.

This is how I read the guidance, but, as Helen states any simple clarification or correction would be a huge benefit

I may be missing something but on H’s death he held a 50% interest absolutely and on W’s death she left her 50% absolute interest to the children.

At the time of H’s death the property was a jointly held asset.

Malcolm Finney

On reflection - yes, I agree it would be “jointly held” so you would need IHT404 despite them not holding as beneficial joint tenants.