Inheritance Tax - possible unused nil rate band from 1965?

greensea27

I am the executor of my recently deceased aunt's will, and am preparing the figures I need to apply for probate.

Her estate is worth more than the current nil rate band of £325k, and I am obviously looking to minimise the amount of Inheritance Tax the estate will need to pay.

My aunt's (first and only) husband died in Feb 1965, and probate was granted 3 months after his death. The net value of his estate was £3,540 and £39-12-0 (that's £39.60) was paid "on account of estate duty and interest on such duty". My aunt was the sole beneficiary in his will.

My question is: was there any equivalent of the nil rate band in effect in 1965, and if there was, any thoughts on how I can determine how much this might allow me to transfer to her current probate application to hopefully decrease the Inheritance Tax due?

greyfox

Before 1975 Estate Duty (rather than Inheritance Tax) applied & there wasn't much of a nil-rate band. As your Aunt paid Estate Duty, the nil-rate band was used then. Except in very unusual circumstances, no "transfer" is possible when the first death was before 1975. This article explains things in more detail.
https://www.taxation.co.uk/articles/2010/01/20/19855/nil-rate-band-problem

Keep_pedalling

Is her estate being left to children and if so did she own her home, or did she sell a home to move into care before she died? If so you can also use her primary residence nil rate band (currently £100k) and can double that up using her husband's allowance.

This assumes her death was not before 6th April this year.

eddyinfreehold

Greensea

I believe the Estate is entitled to some transferable allowance. I am in a similar position with my late father's Estate following his death in Feb 2016. He was widowed 47 years earlier and never remarried. The Estate Duty threshold from 1963-1969 was £5000. See the link below.

If the net value of the Estate was £3540 and £39.60 (of what?? expenses or tax??) was paid, I think there may be a mistake in the original 1966 Grant of Probate or a mistake reading the figures on your copy. Currently if all the modern transferrable allowance was not used up in 1966, and it shouldn't have been as the Estate was £1460 short of the £5000 threshold, then 1460/5000 x 100 should be a transferrable allowance as a percentage to add to your aunt's allowance. If the 1966 Probate declares £3540 then 70.8 pc of the allowance has been used already. I make that 29.2 percent of the presumed £325000 allowance of your late uncle to add to the aunt's £325000 allowance. Therefore on these figures alone I would suggest that the Estate should not be due for IHT unless it exceeds £419,900. Above £419,900 IHT is due at the full rate unless land is involved. I would stress I am not an accountant or solicitor and if you are not confident the get proper legal advice. I will tell you it will be a long haul. We received Grant of Probate in December 2016 and have heard nothing from HMRC since. I hope this helps.

My aunt's (first and only) husband died in Feb 1965, and probate was granted 3 months after his death. The net value of his estate was £3,540 and £39-12-0 (that's £39.60) was paid "on account of estate duty and interest on such duty". My aunt was the sole beneficiary in his will.

My question is: was there any equivalent of the nil rate band in effect in 1965, and if there was, any thoughts on how I can determine how much this might allow me to transfer to her current probate application to hopefully decrease the Inheritance Tax due?

https://www.gov.uk/government/publications/rates-and-allowances-inheritance-tax-thresholds-and-interest-rates/inheritance-tax-thresholds-and-interest-rates

Yorkshireman99

Both you and the OP need to take paid for professional advice. Neither case is straighforward and the fees are likely to be much less than what you pay if you try and DIY and screw it up.

eddyinfreehold

I fully agree and I have. I worked this out myself and took the whole bundle to my solicitor. My case is further complicated by part of the unused threshold declared in a 1970 probate being a trust that was completely used up well before the death of my father !!

Yorkshireman99

Is your solicitor an IHT specialist? Many High Street solicitors are not.

eddyinfreehold

Yes, she is. She is a senior partner in a large London practice miles and miles from where I live. Not cheap, but the potential worst case scenario would be, as you say, far more costly. She is also very approachable, thorough and punctual. Without good and timely communications I would have pulled my hair out by now. These cases must be pretty rare by now.

Yorkshireman99

Noted. Thanks.

Spelunthus

Take legal advice from a competant solicitor. We obtained double IHT relief on an estate where one parent died in 2012, and their spouse had died in 1966 (and had not used their allowance then). But it's complex, and you need good advice, and the correct documents and forms,.

eddyinfreehold

Thank you Spelunthus, Yorkshireman for this. As stated above, I have engaged an IHT specialist solicitor to guide us through the process. Although your case was a few years back now, could you indicate how long HMRC took to decide the case after Probate was granted? We have been sitting on our hands now for 9 months with no news. I am assuming they are still on the case and it hasn't fallen off the desk. The reason for asking is that if additional IHT is required, so will the interest be on any unpaid amount due, as will CGT on the estate owing to the 2016-7 stock market rise. I am willing to go with the solicitor's advice of 'sit and wait' for the moment, but would like to know what the norm is....presumably the time taken by HMRC is longer now than it was in 2012.