Residence Nil Rate Band - does my situation apply?

socratez

I am the executor for my mums estate. I am currently calculating her money and assets (a house with no mortgage), and at the moment it looks like the total value will be a bit higher than £325k. The house will be passed down to myself and the other siblings and we may look to sell the house. Would the resident nil rate band apply in this case. The house value is about the same as the threshold (£175k). If this is correct does it mean the total inheritance tax threshold will be £500k. If that is the case then the total inheritance will fall well short of it. Would I still need to complete the IHT400 form?

Thanks in advance!

RAS

Was your mum married to your father when he died?

socratez

RAS said:

Was your mum married to your father when he died?

No, my parents split up about twenty years ago and she has been single ever since.

RAS

Did they actually divorce?

If so, the IHT allowance is up to £500k, depending on the value of the house, rather than twice that if she was married or widowed.

Keep_pedalling

If her total estate exceeds £325k you will be able to cover the rest regardless of what you plan to do with the house. This does mean you will have to complete an IHT return to claim it.

socratez

RAS said:

Did they actually divorce?

If so, the IHT allowance is up to £500k, depending on the value of the house, rather than twice that if she was married or widowed.

Yes they definitely divorced.

socratez

Keep_pedalling said:

If her total estate exceeds £325k you will be able to cover the rest regardless of what you plan to do with the house. This does mean you will have to complete an IHT return to claim it.

Sorry what do you mean I will be able to cover the rest?

Keep_pedalling

socratez said:

Keep_pedalling said:

If her total estate exceeds £325k you will be able to cover the rest regardless of what you plan to do with the house. This does mean you will have to complete an IHT return to claim it.

Sorry what do you mean I will be able to cover the rest?

Sorry, that should read cover the rest with the residential NRB.

socratez

RAS said:

Did they actually divorce?

If so, the IHT allowance is up to £500k, depending on the value of the house, rather than twice that if she was married or widowed.

The total estate will be around £360k, made up of £180k house and £180k money, so the house should slightly exceed the NRB allowance. Does that mean I need to complete an IHT400 form?

Keep_pedalling

socratez said:

RAS said:

Did they actually divorce?

If so, the IHT allowance is up to £500k, depending on the value of the house, rather than twice that if she was married or widowed.

The total estate will be around £360k, made up of £180k house and £180k money, so the house should slightly exceed the NRB allowance. Does that mean I need to complete an IHT400 form?

Yes, you will need to as the estate is £35k over the NRB.

Loll10

The residence nil rate band can only be applied to direct descendants inheriting the house or a share of the house. I am a direct descendant, my brother is not but we are equal beneficiaries of the estate. This means that only 50% of the RNRB can be used.

The retirement flat was valued on date of death at £90,000. 50% is £45,000 and 50% of £175,000 RNRB available is £87,500.

If the value of the flat was a lot higher then I could have claimed 50% up to a maximum of £87,500 only.

My parents were unmarried but the the property was held as joint tenants and bank accounts were also joint. They also had mirror wills. So everything passed to the surviving parent normally until they themselves died. Without a spouse we couldn't bring forward their own £325,000 NRB and £175,000 RNRB to use against the estate. The estate was well under £325,000 so the other allowances wouldn't have been used anyway.

There is a useful calculator on the the government website to check the available RNRB you can claim for your own situation.

https://www.gov.uk/guidance/inheritance-tax-residence-nil-rate-band

Scroll down to the start button.

There is also one for inheritance tax.

https://www.gov.uk/valuing-estate-of-someone-who-died/estimate-estate-value

Scroll down to the start button.

I only found these calculators by chance and they are not easy to search for. They gave me confidence in knowing that my manual calculations were right.

Sorry the links aren't clickable as I'm a new forum member.