TNRB and legacy to non-domiciled spouse

Is it possible for an estate to qualify for the NRB, the TNRB and also the spousal relief of £325,000 available for legacies to a non-domiciled spouse?

For instance, if Mr A has a full NRB and is entitled to a full TNRB from his late-wife, if he leaves an estate worth £975,000 to his new non-dom spouse, will the the whole estate be exempt because of the NRB, TNRB and limited spousal exemption?

I understand the limited spousal exemption involves calculating a cumulative total of lifetime gifts and gifts on death. Is this limited to gifts in the 7 years prior to death or does it include all gifts regardless of when they were made?

Tobias Gleed-Owen
Hewitsons LLP

The non-dom spousal exemption applies to all gifts from the UK spouse to the non-UK spouse, whenever they are made, provided that at the time of the gift(s) they are married to each other. Any absolute gifts made even the day before the marriage, etc., would be PETs and not affect the relief.

And, yes, the 3 allowances would aggregate to effectively relief the UK-domiciled spouse’s estate of £975,000 from IHT.

Paul Saunders

IHTA 1984 s18(2) provides the answer.

The exemption limit is the limit at the time of the transfer less any amounts previously taken into account for the purposes of the exemption. Hence the 7 year limit is irrelevant and all inter-spouse gifts (from UK to non-UK dom) are taken into account; the exemption is a one-off cumulative amount.

So the £975,000 applies assuming no prior usage of the exempt amount.

Malcolm Finney