Quick Succession relief - jointly owned property

Trusts Discussion
1

Confirmation required please regarding a Quick Succession relief query in respect of jointly owned property.

Sister 1 died. Estate worth around £2.2million. Jointly owned £300k or property of which £200k in one property which was Joint Tenancy, other property tenants in common in equal shares £100k.

Tax paid on estate of £782,000.

Sister 2 died within 12 months. Total estate (including inherited from Sister) £3,000,000.

The question is whether QSR in estate 2 only applies to property inherited under the will or also to property passing under survivorship (which was taxed in first estate).

The file shows the calculation of succession relief as having been made by taking the full amount of IHT and applying the proportion of estate no 1 which passed under the will and does not include the £200k joint tenancy property. Can the property passing under survivorship be included in the share of the estate inherited by Sister 2?

If it does not, this would seem to create an anomaly in that the whole of the net estate of sister 1 was inherited by sister 2 and, taking the two IHT bills across the estates, produces a combined IHT bill which is in excess of 50% of the value of sister 2’s estate.

Michael McCabe

2

QSR applies by reference to the increase in value of the transferee’s estate and would apply both to property passing by survivorship as well as under a will or intestacy (s.141 IHTA 1984).

Mindful that QSR applies on the death of S2 within 1 year of S1 at the estate rate for S1’s estate (on the values quoted: 34% if full NRB available), has the possibility of a variation been considered, which would reduce the IHT bill by 100 % of the rate on the second death (i.e. by 40%) rather than 34%?

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

3

Paul, thank you for confirming what I thought was the case. Unfortunately, I am reviewing and trying to close the files in years3/4 after the deaths, so variation is not an option - but at least 34% relief on the £200k should be available.