Mrs died 2023 owning a half-share of various properties with surviving spouse, Mr. Mr died last year, before title to the properties was transferred to him. Can I claim TRNRB on Mrs share due to Mr but not transferred before date of death?
IHT is about equitable ownership for property law (or what the IHT legislation describes as “beneficial” ownership). The location of the registered title at HMLR is not strictly germane to your question, although not without wider legal significance: only the registered proprietor can transfer the legal title so if such person is dead, or all are if plural, the title must first be changed to facilitate such a future transfer. It is not devoid of all tax relevance either, in that HMRC will take the register position as prima facie evidence of beneficial ownership if a person not registered as proprietor disputes that conclusion as being wrong in law.
You do not say so but you seem to be indicating that the spouses were equitable joint tenants and not equitable tenants in common. If so on the first death the equitable interest of the first to die passed to the survivor by operation of law. Thus on the death of the survivor he owned the entire equitable, in tax terms beneficial, interest in the property and so the entire qualifying residential interest for RNRB and TRNRB. Of course it must be further demonstrated that someone closely inherited that QRI.
This is the outcome for IHT regardless of the state of the register. However, what it says may be of some evidential value if more than one person is currently registered as proprietor. The absence of a Form A restriction would connote a prior confirmation to HMLR that the transfer to more than one person submitted for registration had ticked the box to describe them as equitable joint tenants. Of course if there was only one transferee this would not have been relevant.
If the spouses had been equitable tenants in common it would be necessary to identify whether under the will or intestacy of the first to die her interest had passed to the survivor or, if not, whether it was closely inherited by anyone else. In the latter case RNRB would have been due in priority to NRB and automatically, see IHTM46003. TRNRB might also be available if she had a former deceased spouse but would need to be claimed. The survivor could not claim it on their death and it is often a feature of IHT planning in such a case to ensure that there is a tenancy in common and that the interest of the first to die is not left to the survivor (which would be exempt) but to a chargeable person who closely inherits the QRI and can utilise both residence rate bands (if its value is sufficient).
Jack Harper
Thank you, Jack. I should have said I’m in Scotland. There was no survivorship in the title. If the property had passed to Mr by operation of law then the RNRB position would be clear.
They each owned a one-half pro indiviso share of the property (I think the English equivalent would be equitable tenants in common?) and Mrs one-half share has not yet been transferred before Mr died. Her Will bequeaths the property to Mr. The Land Register has not been updated.
I hoped the position would be that as Mr is beneficially entitled, albeit the title not yet updated, I would be able to claim TRNRB.
I will look at the IHTM46003.
Many thanks,
Shannon
The Scots law point is rather important. It is outside my scope.
Jack Harper
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| Shannon Shannon Gibson
21 April |
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Thank you, Jack. I should have said I’m in Scotland. There was no survivorship in the title. If the property had passed to Mr by operation of law then the RNRB position would be clear.
They each owned a one-half pro indiviso share of the property (I think the English equivalent would be equitable tenants in common?) and Mrs one-half share has not yet been transferred before Mr died. Her Will bequeaths the property to Mr. The Land Register has not been updated.
I hoped the position would be that as Mr is beneficially entitled, albeit the title not yet updated, I would be able to claim TRNRB.
I will look at the IHTM46003.
Many thanks,
Shannon