Residence Nil Rate Band -Estate Duty-IIP and Widow

Anything To Suggest That Widow Entitled to RNRB or Transferable RNRB for Her Home Within IIP?

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Widow died recently, husband died in 1970. Estate Duty of some £14,000 was paid on husband's estate back in 1971. Under the terms of the husband's Will a life interest in the residue of his estate was left to his widow.

The IIP is comprised of the only home used by the widow worth around £750,000 and investments worth around £1,000,000. The IIP will not be subject to IHT on the widow's death due to the Estate Duty transitional provisions, and so will be inherited IHT-free by the widow's children.

There is plenty of guidance to indicate that the widow will not receive any transferable NRB from the husband because Estate Duty was paid and hence there is no spare Estate Duty spouse exemption to transfer. (See the following link if interested:)

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm43060

But I can find no commentary at all on the transferable residence nil rate band from the husband. However, looking at it logically, the IIP is exempt from IHT and so the widow's home which is in the IIP is exempt from IHT. So I cannot see how there is any IHT-chargeable home from which transferable RNRB could emanate, or the widow's RNRB for that matter.

I am only putting this on AWeb in the event I am wrong, because the widow's daughter reckons her solicitor thinks a claim for the transferable RNRB (and presumably RNRB) could be in order. But how could this be possible.

Replies (3)

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By Tax Dragon
20th May 2024 06:12

Apply law not logic.

Your logic is easy to overturn with the law - that's just Ss8D to H.

To ascertain the answer provided by the law, you of course need to read much more than that, including the definition of 'estate' in s5 and the transitional rules you mention.

But again I find myself wondering what your role is here, if there's a solicitor dealing with the estate. And - if you're batting for the same team - why it appears you're not talking to each other.

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By Paul Crowley
20th May 2024 11:43

Solicitors deal with this stuff every day. Accountants may plan it, but are not there at the end.
Chances are that he knows what is normal practice.

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By FactChecker
20th May 2024 14:28

NOT meant to be cheeky or patronising, but I notice that this is your 5th post already this year that revolves around inheritance issues.

As TD mentions, I too am wondering what your role is here?
If it is just a series of coincidental events, and where your involvement is peripheral, then I guess it's all a learning experience as long as you don't accidently cross the line into advice.
But if you are the appointed tax adviser, then have you considered finding someone to whom you can sub-contract specialist advice?

In the current scenario, I would at least ask the Solicitor to explain the basis for their proposal (which would also avoid the danger of misinterpretation during the chain of "widow's daughter (has told me that she) reckons her solicitor thinks").

FWIW this is not an area for the faint-hearted, and is way outside my pay-grade, but have you read https://www.legislation.gov.uk/ukpga/1984/51/section/52 ?

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