TNRB multiple marriages

Wife 1 was married to Husband

Wife 1 died and left everything to Husband

Husband then remarried Wife 2

Husband died

Husbands estate was £613k. Husband left £11k to Wife 2 (Spouse exempt) and balance to his children. NRB at Husbands death was £325k and executors claimed Wife 1’s TNRB - No IHT payable.

Wife 2 has now died.

Do readers concur that the £11k Husband left to Wife 2 cannot now be claimed as a percentage of Husbands TNRB and may be able to point me in the direction in the legislation Section 8a IHTA 1984?

Daniel Boyle
Brethertons Solicitors LLP

My understanding is the Wife 2 can claim H’s unused NRB, so on your figures that won’t just be the £11K he left to her but also the difference between the value of his estate and the amount of his NRB which was presumably £650K. So there should be £48K unused NRB available to Wife 2.

I find the relevant sections of the IHTA headache-inducing but believe sections 8A and 8B expressly permit and allow for the possibility of a second wife, for example, effectively claiming the unused NRB of her husband’s first wife, which is sort of the situation here.

I haven’t submitted one of these claims for a while but I also recall that the IHT forms didn’t work properly in this situation, so you have to do the calculations by hand and explain to HMRC what you have done. They may have corrected that by now.

Diana Smart
Gordons LLP

The relevant sections are ss 8A(6)(a) and 8A(5).

On H’s death H was entitled to his own NRB plus that of W1 ie 650K in total.

H used 602K of this 650K thus leaving unused 48K.

To determine that amount of H’s unused NRB (Ie %) available to W2 then using the terminology of s8A:

E/NRBMD = 48K/325K = 14.769%.

M = 650K
VT = 602K.
NRBMD = 325K
E = 48K

Thus W2’s NRB is [325K + 14.7695 of 325K]…hopefully if I’ve done it properly.

Malcolm Finney

Taking this a stage further and applying the same principles, say H left £650 k to a 2 year discretionary trust and used his NRB plus TNRB from first wife. If the trustees then appointed £325k to W2 within two years of the death of H does that mean she can later transfer all of H’s NRB as unused? ie is it the first wife’s TNRB that is deemed to have been used up?

Paul Lowery
Boyes Turner

My understanding is that on H’s death he has a single NRB ie any transferable NRB is simply used to increase his own NRB. His own NRB and the TNRB are co-mingled and are not distinguishable. Hence, in the above formula “M” is simply comprised of one figure [IHTA 1984 s8A(2)].

It is not therefore possible in your scenario to state that it is his own NRB or the TNRB that has/has not been utilised.

As an aside, although the two (ie NRB and TNRB) bands may be co-mingled the TNRB element is only available for use with respect to IHT due on death and thus, for example, cannot be used against IHT on a lifetime transfer immediately chargeable (eg creation of a discretionary trust).

Malcolm Finney