Can anyone help with this?
Mr. A has just died leaving an estate of £850,000 of which his house is worth £175,000. His estate passes to his children. His wife Mrs. B died 2 years ago leaving her whole estate by her Will to her husband, Mr. A…
Mr. A’s estate can claim the transferable nil rate band from his wife’s estate of £325,000. As Mrs B didn’t use her RNRB it is also transferable to Mr. A’s estate.
I have it in my mind that the maximum RNRB that can be claimed in Mr. A’s estate is the value of the house i.e. £175,000 so transferring Mrs. B’s RNRB will be of no benefit. However, I can’t find anything confirming whether this is the case or not.
I should be grateful to hear from anyone who has the answer.
Progressive Wills Ltd
Dear Gary - notes from https://www.gov.uk/guidance/inheritance-tax-residence-nil-rate-band
The home inherited by direct descendants does not have to be worth more than the basic or transferred basic threshold, to get the RNRB.
You apply the RNRB to the whole taxable estate, not just to the value of the home, so the whole estate shares the benefit of the RNRB.
If the home is worth less than the maximum available RNRB, you cannot set the unused amount against the other assets in the estate. But, the unused amount would be available to transfer to their wife’s, husband’s or civil partner’s estate when they die and leave a home to their direct descendants.
Lucy Orrow CTA TEP
Lambert Chapman LLP
Yes, the amount of RNRB available in 2020/21 including any transferable RNRB is the lesser of £350,000 and the value of the residential property ie in your case £175,000 (ignoring downsizing).
[IHTA 1984 s 8E(1)]