I have the following scenario:
H died August 2019. He had surviving spouse (W2) and had previously been widowed (W1). We claimed transferable nil rate band and transferable residence nil rate band from W1’s estate - all wholly unused on her death. That gave H’s estate NRB of £650,000 and RNRB of £300,000.
W2 carried out variation gifting £200,000 cash and £350,000 half-share of property to son.
I have two questions on calculating the NRB and RNRB:
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If the total chargeable gifts to son in DoV are £550,000, can we apply those gifts to the NRBs available in any way or are they utilised in a particular order? For example, could we apply £150,000 of the gift of the property to the RNRB of £300,000 leaving £150,000 unused with £400,000 of the remaining gift applied to the NRB?
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The unused NRB on H’s death is based on the total available (including TNRB). IHTM43032 has an example of the calculation. If total NRB is £650,000 on H’s death and £400,000 used then percentage to apply to W2’s NRB is 38%. Is the calculation of the unused RNRB the same? Qs 16 to 22 of IHT436 indicate that the calculation is different. I have Default Allowance in box 16 as £300,000, say amount of RNRB used as £150,000. Box 18 is then £150,000 and box 20 then gives 100% so an increase in W2’s RNRB to £350,000.
I would welcome comments on above.
Samir Hussain
Gregsons