Inheritance Tax Transferable Nil Rate Bands

mark55man

Scottish Law - Warning!!

Sadly my Father-in-law passed last week so we are now starting planning / getting to probate/confirmation.

His wife passed in early 2000's - so am I correct in assuming any nil rate band due to her (IHT nil band was around £250K then) will be usable by for my FIL's estate MINUS any gifts she passed in her will (except what was passed to my FIL).

I read the primary transferable NRB legislation was passed after her death but that existing widowers (as he was at that time) are covered. 

Further both him and her have their residential nil rate band entitlement, however as my FIL downsized before 8/7/2015 no downsizing relief will be claimable for her RNRB

I am also assuming that English and Scottish law are not significantly different in this respect - but would like to be corrected if needed.

Thank you - there will be solicitors involved (as executor) but I like to know the rough shape of what I am getting into

Keep_pedalling

mark55man said:

Scottish Law - Warning!!

Sadly my Father-in-law passed last week so we are now starting planning / getting to probate/confirmation.

His wife passed in early 2000's - so am I correct in assuming any nil rate band due to her (IHT nil band was around £250K then) will be usable by for my FIL's estate MINUS any gifts she passed in her will (except what was passed to my FIL).

It is the unused percentage of the NRB that is transferable, for example if she passed £50k to her children when the allowance was £250k then 20% would have been used and 80% can be claimed on FIL’s estate at the current NRB (£325k - £65k = £260k) 

I read the primary transferable NRB legislation was passed after her death but that existing widowers (as he was at that time) are covered.  

That is correct.

Further both him and her have their residential nil rate band entitlement, however as my FIL downsized before 8/7/2015 no downsizing relief will be claimable for her RNRB

That is also correct.

I am also assuming that English and Scottish law are not significantly different in this respect - but would like to be corrected if needed.

Thank you - there will be solicitors involved (as executor) but I like to know the rough shape of what I am getting into

I am pretty sure that as far as IHT rules are concerned there is no difference in Scotland. 

mark55man

Aha - thank you so the value of the NRB is proportionate to what was used based on the value then.  ie the %age is used to calculate the current NRB by multiplying that %age against the current threshold

OK that's very useful thank you

mark55man

Hello @Keep_pedalling - one more wrinkle if I can pick your brain again

We estimate the value of FILs current house is about £200K so although no downsizing relief is possible from my MIL (the former house was closer to £400K) can we take the excess of the current house value (200K) and the current RNRB (175K) and use part of MIL's RNRB to cover that excess ie £25K