Mother's IHT & father's unused Nil Rate allowances. Problem. -he died 2008. Probate was never done.

electricity_meter_problem · 21 January 2021 at 1:32PM

My father died in 2008 leaving (in a mirror will) everything to my mother. No IHT205 nor Probate was done (as everything was in joint names, no Grant of Representation was needed).

My mum died 2020 (covid related).

I wish to claim his unused Residence Nil Rate Allowance. But the IHT436 form for this asks questions that appear answerable only if an IHT return had been done in 2008. Namely, question 5, asks for his Inheritance Tax Reference number, and question 7, the Total Net Value of his Estate.

(1) Could I just leave out the Inheritance Tax Reference number, and (2) put £0.00 for his Estate? He, in effect left no estate, as all his property and funds were already owned by my mother. It is not the situation, of him owning property which she then by inheritance acquired on his death (surely you cannot inherit what you already own).

Should I put an explanation to this effect in the “Additional information” section at the end of IHT400? Or do I need to do a IHT205 for my father, even though, given the lack of records, this would be near impossible, and processing this would delay my mother’s IHT submission?

Here are the exact questions in IHT436.

Question 5: “Inheritance Tax reference number for spouse or civil partner’s estate”

Question 7: “Total net value of spouse or civil partner’s estate before exemptions or reliefs”

Answers and explanations would be greatly appreciated.

naedanger · 22 January 2021 at 1:37AM

electricity_meter_problem said:

My father died in 2008 leaving (in a mirror will) everything to my mother. No IHT205 nor Probate was done (as everything was in joint names, no Grant of Representation was needed).

My mum died 2020 (covid related).

I wish to claim his unused Residence Nil Rate Allowance. But the IHT436 form for this asks questions that appear answerable only if an IHT return had been done in 2008. Namely, question 5, asks for his Inheritance Tax Reference number, and question 7, the Total Net Value of his Estate.

(1) Could I just leave out the Inheritance Tax Reference number, and (2) put £0.00 for his Estate? He, in effect left no estate, as all his property and funds were already owned by my mother. It is not the situation, of him owning property which she then by inheritance acquired on his death (surely you cannot inherit what you already own).
Should I put an explanation to this effect in the “Additional information” section at the end of IHT400? Or do I need to do a IHT205 for my father, even though, given the lack of records, this would be near impossible, and processing this would delay my mother’s IHT submission?
Here are the exact questions in IHT436.

Question 5: “Inheritance Tax reference number for spouse or civil partner’s estate”

Question 7: “Total net value of spouse or civil partner’s estate before exemptions or reliefs”

Answers and explanations would be greatly appreciated.

I am slightly surprised no-one more knowledgeable has yet answered. I will have a go at some of the questions but am not familiar with this situation.

Firstly I don't see how, in general, a person's executor can be expected to complete a tax return for that person's spouse. (I am guessing you might be your late father's executor. But supposing you weren't how then could you complete a tax form for them.) So I can't imagine the solution is for you now to complete a IHT205 for your late father.

So for question 5 I would answer: "None. The spouse left everything to his wife, probate was not obtained, no IHT was due and no IHT return completed."

For question 7, it is tempting to answer zero, since that seems the most relevant figure but it isn't what the question asks. I am guessing from the calculations on this form that they do need to know the figure of his estate before exemptions because of the tapering out of RNRB on very large estates. Do you know whether the value of your late father's estate would definitely been below £2 million when he died? If you know it would have been less than £2m then I would enter a figure that you know would be an upper bound for his estimated estate. Then follow through the figures and you should, I think, still get £175,000 at question 22. If so then I would add a note in the Additional Information section explaining the situation i.e. you don't know the exact value of your late father's estate before exemptions (and give the reasons, which I am guessing will be quite common) but you know it was no greater than the value you have entered in box 7. Furthermore his net estate after exemptions was zero. (Do make sure the calulator mentioned in question 22 is still giving the value you expect before adopting this approach.)

If the estate might have been more than £2m I think I would ask HMRC what you should do.

Keep_pedalling · 22 January 2021 at 9:24AM

It is quite common for probate not to be applied for when the first partner dies, so I would leave Q5 blank and add a note to say why it is blank. You do need to add a value in Q7. As everything went to your mother and was exempt, it is fine to provide an estimated value providing it was not approaching the £2M mark.