Partial Waiving of Index-linking with a NRBDT

Do forum members feel that it is possible to limit the index-linking due under a Nil Rate Band Discretionary Trust Loan agreement (set up on death of H in 2005) to the present Nil Rate Band? A loan was agreed over the property to the value of the NRB in place at the time of £263,000.

The estate is sufficiently susceptible to IHT that the full-index linked repayment (now that the surviving spouse has also died) is beneficial, to a point. There are enough low or non-tax paying beneficiaries that the IFA involved believes that they will be able to partially reclaim the income tax paid. However, he believes there is a ‘sweet spot’ which is around the present £325,000 NRB. This would allow most, if not all the income tax paid on the index linking, to be reclaimed.

The issue is whether this would actually be allowed or has been done before.

The Will allows the Trustees the power to waive in whole or part of any interest.

Any comments are gratefully received.


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