I am dealing with the estate where the overall value of the estate is approximately £705,000. We are able to claim the TNRB as the deceased’s late husband left everything to his wife on her death. The value of the property is £140,000. By claiming the RNRB limited to £140,000, there will be no tax to pay.
My understanding has been that in order to claim the RNRB, IHT400 needs to be submitted to HMRC even if there is no tax to pay. Am I right?
Or, is it the case that I can just submit the application on the portal even though the value of the estate exceeds £650K and the beneficiaries are non-exempt.
Estates that exceed the IHT NRB threshold so that tax is potentially payable but where a claim for the RNRB would mean that there would be no tax to pay are not treated as excepted estates. The definition of an excepted estate is set out in Regulation 4 of the Inheritance Tax (Delivery of Accounts) (Excepted Estates) Regulations 2004 and the term “IHT threshold” (as used in regulation 4) is defined in regulation 5A. Although Regulation 5A was amended in 2011 to take into account the TNRB it was not amended to take account of the RNRB. Therefore, to claim the RNRB a full IHT400 and IHT435 must be completed in all cases.
For the avoidance of doubt, I think both Ross and Andrew are correct. You don’t need to specifically claim the RNRB but you will still need to file an IHT400 if you do not come within the very specific definition of an excluded estate.
In practice, if you need the RNRB to avoid or reduce an IHT liability, you will not be an excepted estate and will need to file an IHT400…in which you will fill out IHT435…to apply the RNRB. Totally not a claim!
Just to give a real example of this, I was introduced to a client last year who had started their own DIY probate application on this basis and the probate office stopped the application and required the client to complete the IHT forms and get the code prior to probate being granted. We then filed the IHT returns, the client then contacted the probate office with the clearance code and they had probate granted a day later.
Thank you all for your input into this. I has been really helpful and clarified what I thought but wanted to double check as someone told me (who also works in this area) that if an estate is not taxable, it is not necessary to submit IHT400 to claim the RNRB
I rang HMRC about this a few months ago as their manual and guidance is unclear, especially for lay Executors. They confirmed you would need to submit an IHT400 to claim the RNRB.