Iht435 & 436

joesoap1264

Hi guys, looking at these forms, only to discuss them with my kids, who will be my/our executors when we die.
depending on which of us goes first, the surviving spouse will need to apply for unused nab,herb, presume using these forms
iht 436 looks like a quadratic equation !
reminds me of logs and anti logs when I was a kid at school !
can anyone explain them in layman’s speech, how these are filled in.
I reckon to be quite fiscally astute, but these forms go right over my head 🤬
any help to digest them would be very much appreciated.

Keep_pedalling

For most estates it’s much simpler than it looks. Most people won’t have an estate that exceeds £2M and most people won’t have used any of their RNRB because the house passes by survivorship to the spouse (joint tenants) or will either leave their home to their spouse or have given their spouse a life interest in their share of the house (tenants in common)

Now assuming both those things apply to the estate of the first to die then on the second death IHT436 would be filled in as follows.

Q6 - No

Q7 - Value of the first to die estate e.g. £500k

Q8 - Value of taper threshold hold at time of death currently £2M *

as the value of Q7 is less than Q8 skip straight to Q13

Q13 - 100.0000% 

Q14 - Value of RNRB currently £175k

Q15 - Q13 x Q15 = £175k

Sheet finished.

* Taper threshold applies to estates over £2M and reduces the RNRB by £1 for every £2 over the threshold so estates over £2.35M don’t get the taper relief.

joesoap1264

Cheers K.simplified it a lot.
as you know, our estate is at present house£475k, money in bank , £250 me,£400 wife. 

Estate value £1m
everything goes to each other on death.
If everything stays the same, should I go first, are your figures changed, or does not matter who goes first, the figures of yours stay the same ?
or, is your explanation applicable to those with assets c£2m?
sorry for asking what might be daft questions, but  this is the only schedule that I just am struggling to get my head around.

Keep_pedalling

joesoap1264 said:

Cheers K.simplified it a lot.
as you know, our estate is at present house£475k, money in bank , £250 me,£400 wife. 

Estate value £1m
everything goes to each other on death.
If everything stays the same, should I go first, are your figures changed, or does not matter who goes first, the figures of yours stay the same ?
or, is your explanation applicable to those with assets c£2m?
sorry for asking what might be daft questions, but  this is the only schedule that I just am struggling to get my head around.

My example applies to either of you and anyone with an estate of below £2M. 

joesoap1264

Thankyou very much K, really grateful.

joesoap1264

Keep_pedalling said:

For most estates it’s much simpler than it looks. Most people won’t have an estate that exceeds £2M and most people won’t have used any of their RNRB because the house passes by survivorship to the spouse (joint tenants) or will either leave their home to their spouse or have given their spouse a life interest in their share of the house (tenants in common)

Now assuming both those things apply to the estate of the first to die then on the second death IHT would be filled in as follows.

Q6 - No

Q7 - Value of the first to die estate e.g. £500k

Q8 - Value of taper threshold hold at time of death currently £2M *

as the value of Q7 is less than Q8 skip straight to Q13

Q13 - 100.0000% 

Q14 - Value of RNRB currently £175k

Q15 - Q13 x Q15 = £175k

Sheet finished.

* Taper threshold applies to estates over £2M and reduces the RNRB by £1 for every £2 over the threshold so estates over £2.35M don’t get the taper relief.

Hi K, sorry to go over old coals, what form is this referring to, as it doesn’t seem to fit with iht 435. Questions.?

joesoap1264

Sorry K, it’s 436.
getting confused.
trying it against 402 !
402 is as confusing as 436.

joesoap1264

Perhaps I need more sleep.😴
iht 435, not sure if I will need that,?
435&436 both relate to rnrb  transfer ?
402&436 are what I assume relates to me ?

poppystar

435 is RNRB claim for deceased
436 is RNRB transfer from previous deceased spouse
402 is NRB transfer from previous deceased spouse

If on death of second spouse the estate is still as large as you set out now then yes you will need all three allowances in addition to the NRB of the second spouse 

Keep_pedalling

joesoap1264 said:

Perhaps I need more sleep.😴
iht 435, not sure if I will need that,?
435&436 both relate to rnrb  transfer ?
402&436 are what I assume relates to me ?

You do need more sleep, you personally won’t need any of those but your executors will if you were the second to die.

IHT 402 covers the transferable nil rate band
IHT 435 covers the residential nil rate band
IHT 436 covers the transferable nil rate band  

402 looks complex as it takes into account the fact that any unused NRB is passed to the survivor’s  estate as a percentage rather than a monetary value to allow for future changes to that allowance.

I think you you probably looking at this rather too deeply as thing are highly likely to change by the time the second death has occurred so what you need to do today is likely to be quite different in the not too distant future. Help is always available here and in more complex cases executors can always consult a professional.

joesoap1264

Thanks both, much appreciated.