Separated couples and the Transferable Nil Rate Band

Am I right in thinking that a married couple who have been separated for 25 years but are still legally married, could transfer their Nil Rate Band if they are still married when the first one dies? They both have new partners and separate dwellings but have no plans to divorce.

Yes a spouse is defined in IHTM11032
IHTM11032 - Inheritance Tax Manual - HMRC internal manual - GOV.UK (www.gov.uk)

So, if on the death of the first spouse the nil rate bands are not fully used then on the second death the PRs could claim any unused amount via IHT402.

I note that the spouses have new partners have they written wills leaving any of their estates to their new partners? This would use up some of their nil rate bands.

Kim Jarvis
Vitality

Thank you Kim. I appreciate your reply.

There is no definition in IHTA 1984 of the term “spouse”.

However, in Holland (Executor of) v Inland Revenue [2002] UKSC SPC00350 the Special Commissioners held:

“96. Our decisions on the issues for determination in the appeal are:
(1) that the word spouse in section 18 of the 1984 Act means a person who is legally married and does not include a person who has lived with another as husband and wife;”

Separation has no effect (for IHT).

Malcolm Finney

Thank you for your help.

interesting to know this as well.

I have asked my paralegal to search on separation in other jurisdictions and the legal effects. In some jurisdictions, separation could deprive one spouse of the right to inherit estates of the other.