Inheritance tax transfer of residential enhancement

MarkWatson

Hello,
I am dealing with an estate of someone who has just died and who had property. I understand that if the property is left to children then £175,000 can be added to the reliefs before inheritance tax has to be paid. I also understood that up to a further £175,000 was available if a spouse had died and not used up the relief. The spouse died in 1981 though and I have been told that only £100,000 extra relief is allowed, not £175,000 - is that right?

Keep_pedalling

Not true, it is the full £175k unless the house is worth less than £350k or the estate exceeds £2M.

xylophone

See
https://www.taxinsider.co.uk/the-transferable-residence-nil-rate-band-extra-iht-savings-ta

Deaths pre-6 April 2017

Where the first spouse to die died pre-6 April 2017 (i.e. before the legislation was introduced), the surviving spouse on death is automatically entitled to an additional 100% of the latter’s RNRB by way of transfer.

 

RNRB may be capped

The amounts of RNRB mentioned above for a tax year are maxima. For example, if in 2019/20 an individual died and his home was worth (say) £120,000, the RNRB would be restricted to £120,000.

 

Need for a claim

The transfer of an unused RNRB is not automatic; it must be claimed (using Form IHT436) within the requisite two-year time limit.
https://www.gov.uk/government/publications/claim-to-transfer-any-unused-residence-nil-rate-band-iht436