ihtm46043 - Transfer of unused RNRB: effect on available RNRB

IHTM46041 explains how the brought-forward allowance (IHTM46040) is calculated and how it increases the residence nil-rate band (RNRB) that is potentially available to the estate of the surviving spouse or civil partner. However this increased RNRB can only be used on the survivor바카라 사이트™s estate to the extent that there is a qualifying residential interest (QRI) (IHTM46011) which is closely inherited (IHTM46013). The brought-forward allowance is not simply an addition to the RNRB that is due. The examples below show how the brought-forward allowance affects the total RNRB available to an estate.

Example 1

David died in August 2015 with an estate valued at £500,000, which he left to his civil partner, Daniel.

Daniel died in December 2018 when the residential enhancement (IHTM46022) was £125,000. Daniel left an estate of £800,000 including a house worth £400,000. He left the whole of his estate to his children.

The unused RNRB in David바카라 사이트™s estate is treated as being £100,000 in accordance with IHTA84/S8G(4)(a) because his death was before 6 April 2017. This is 100% of the residential enhancement that is treated as being available at his date of death in accordance with IHTA84/S8G(4)(b). Daniel바카라 사이트™s estate is entitled to claim a brought-forward allowance of 100% of the residential enhancement at Daniel바카라 사이트™s date of death, which is £125,000.

This brought-forward allowance (£125,000) is added to the residential enhancement available on Daniel바카라 사이트™s death (£125,000) to give Daniel바카라 사이트™s estate a default allowance (IHTM46024) of £250,000.

As Daniel바카라 사이트™s estate is below the taper threshold (IHTM46023), there is no reduction made to the default allowance.

Daniel leaves a house worth £400,000 to his children. Daniel바카라 사이트™s estate is entitled to RNRB equal to the lower of £250,000 (his default allowance) or the value of the residence that is left to his children (£400,000). Daniel바카라 사이트™s estate therefore qualifies for RNRB of £250,000.

Example 2

The facts were the same as in Example 1 above, but Daniel leaves the whole of his estate to his nephew.

Daniel바카라 사이트™s estate is entitled to claim a brought-forward allowance of £125,000 in respect of the unused RNRB in David바카라 사이트™s estate.

This brought-forward allowance (£125,000) is added to the residential enhancement available on Daniel바카라 사이트™s death (£125,000) to give Daniel바카라 사이트™s estate a default allowance of £250,000.

As Daniel바카라 사이트™s estate is below the taper threshold, there is no reduction made to the default allowance.

Although Daniel바카라 사이트™s estate has a default allowance of £250,000, there is no QRI being closely inherited from his estate. There is therefore no RNRB available to Daniel바카라 사이트™s estate.