This has been an informative thread, and I found Malcolm Gunn’s suggestion interesting.
Consider an estate comprising only a house worth £450,000 and cash of £50,000.
Scenario 1-
The deceased leaves a legacy of £450,000 to his son, and the residue to the deceased’s brother. Malcolm’s argument is, I believe, that £400,000 value from the property must be paid to the son, so RNRB must be available.
Scenario 2-
The deceased leaves a legacy of £450,000 to his brother, and the residue to the deceased’s son. It seems highly improbable that HMRC would accept the availability of full RNRB on the basis that the house passes to the son as part of residue. The residue would only be £50,000, so only that amount of RNRB could be claimed. The remainder of the house must be used to pay the legacy to the brother.
The arguments appear equivalent. Of course, this is all based on valuation and a scheme of division at date of death, but that underlies the whole basis of inheritance tax on death.
Dale Ross
Blackadders LLP