Inheritance tax questions

[adrian222]

hello, i am applying for Probate for 2 people at the moment, first the easy one:

my friend died, leaving a will, stating that the joint executors should be me and his sister, and leaving small amounts of money to several of his cousins also the same amounts to 2 friends (me and someone else), with the remainder to go to his sister. His estate is worth just over the £325K inheritance tax threshold so i am wondering if Residence Nil Rate Band applies (which takes the threshold upto £500K), his sister does not plan to take possession of the flat and she is not really a direct descendant of her brother.

secondly, my father died leaving his estate to be divided equally between his 2 sons,; (his estate comprised a house and lots of shares). Am i correct in saying that, even if neither of his sons intends to take possession of the house, Residence Nil Rate Band still applies, as we effectively have inherited the house, as part of his estate.

[sederunt]

(Assuming friend has no predeceasing spouse nor any children.) There will be no entitlement to RNRB in friend’s estate because his residential interest is not inherited by a direct descendent. So there should be an IHT liability for the excess above £325k.

(Assuming there is no transferable NRB available from a predeceasing spouse). RNRB should be available for father’s estate given the stated circumstances. And IHT400 needs to be submitted to HMRC to claim RNRB even if there may be no IHT liability.

[adrian222]

thank you very much for that:

regarding my father, yes there is 100% transferable NRB from my mother who died prior, so i am, hopefully, looking at a total IHT threshold of £1M but does either son (i am one of them) have to take possession of the property for the RNRB to apply?

[sederunt]

No you do not need to take possession as such, for RNRB to apply.

But you can only claim £350k (RNRB plus TRNRB) if the house value is £350k or over.

[adrian222]

thanks...from what i understand, a dceased persons NRB is 325K. We also have the transferable NRB from my mother of 325K, making 650K. But, do we not have the 175K RNRB from each of my mother and father, which is 350K, making a total of £1M altogether? I wasn't aware that property value came into it at all.

[sederunt]

The amount of RNRB available is limited to the value of the home that is left to the direct descendants. [quote from HMRC manual]

[adrian222]

as the house left to us is well over 325K, then the whole of RNRB & TRNRB can be claimed, but i dont think the limit on house value is well known