H&W owned property 50/50 as tenants in common. This consisted of the main house and ground floor annexe (worth c £800k). W died 4 years ago. Her Will contains the following clause:
"I give free of tax my interest in the property known as XXX (“the Property”) to my Trustees on the following trusts
In this clause the Property Fund shall mean my interest in the Property
My Trustees shall hold the property fund for my said husband XXX for his life or until such time as he shall remarry or cohabit with another or permanently cease to residue therein if earlier and after his death or the earlier cessation of his rights of occupation as detailed above for my daughter the said XXX and my son the said XXX and if more than one in equal shares”
H ceased living in the main house two years ago and now lives in a fist floor annexe which he built after his wife’s death. He is not sure on the value but likely c.£175k. As I read it, his interest under his Wife’s Will has terminated as he has permanently ceased to reside in the property. He has therefore made a PET to the son and daughter.
The main house and annexes all currently share a title number but the two annexes are completed self contained. He is wanting to split the title so that they all have separate title numbers.
H wants to gift his 50% interest in the main house and first for annexe to son and daughter to mitigate IHT. He is not retaining any benefit. His interest is worth c.£400k
He will have his RNRB as his Will leaves his estate to his son and daughter and he will own the first floor annexe when he dies. What TRNRB will be available here? As W did not use her RNRB as her interest was left in an IPDI to H, this should be available to transfer, but to what extent? The value of his interest in the annexe is less than the 50% interest in the main house and ground floor annexe that he wants to gift, so it is downsizing allowance? If so, how does that work and interact with the TRNRB. The rest of the estate consists of a pension pot currently worth £750k (which from 6 April 2027 will be included in the estate for IHT purposes), a potential £200k in compensation following his wife’s death and his £175k annexe. Hope this is making sense. Any help would be appreciated.
Thanks,