Transferring Nil Rate bands

by Richard Allum on 6 August 2008

Since 10 October 2007, it has been possible for the Nil Rate Band (currently £312,000) to be passed to the spouse or civil partner if not fully utilised on the first death.When the first spouse/civil partner dies nothing needs to be done in terms of making a claim to transfer their unused Inheritance Tax Nil Rate Band. However, it would be prudent at this time to gather the relevant information and documents necessary, otherwise it could be difficult to make the claim in the future.

The actual claim to transfer the unused Nil Rate Band must be made by the personal representatives of the surviving spouse i.e. on the second death of a couple. They should complete HM Revenue and Customs form IHT216 and return this with form IHT200, within 24 months of the death of the second spouse or civil partner.

The types of documents and information that should be gathered in order to support a claim include:

  • Death certificate of the first person to die;
  • Marriage certificate or civil partnership certificate for the couple;
  • Copy of the grant of representation of the first person to die;
  • Any Deed of Variation executed to change the people who inherited the estate of the first person to die;
  • Details of who benefited under the Will or intestacy of the first person to die and the values of their entitlements;
  • Details of any assets of the first to die jointly owned with another;
  • Details of any trusts in which the first to die held an interest that was part of their estate for Inheritance Tax;
  • Details of any gifts or other transfers which the first to die made within seven years of their death that became chargeable on their death;
  • Details of any exemptions and reliefs, other than the spouse or civil partner exemption, relied on when calculating the Inheritance Tax on the estate of the first person to die.

This is quite a list and where the individual died some years ago, it may be difficult to provide this information, in which case copies of some of the documents can be obtained from the following public records bodies:

You could also contact the solicitor (if any) who handled the deceased’s estate and contact the executor’s or personal representatives of the deceased to try and supply HM Revenue and Customs with sufficient proof.

Comment

For any client where their children or other beneficiaries could save Inheritance Tax at 40% by being able to claim an uplift in the Nil Rate Band by virtue of the unused Nil Rate Band available on the first spouse’s/civil partner’s death, I strongly recommend that immediate action is taken to get the paperwork in order. A good idea is to complete the HM Revenue and Customs form IHT 216 now and putting this in a safe place with the documentation needed, even though it is not needed by HM Revenue and Customs until the surviving spouse/civil partner dies.

It goes without saying that a person’s death, particularly a family member, is deeply stressful and upsetting and this period is not conducive to having to sift through lots of paperwork to try and satisfy HM Revenue and Customs of a claim. This is definitely a task best addressed when all parties, the surviving spouse/civil party and their appointed executors, are all of a clear mind.

{ 1 comment… read it below or add one }

justin roake 12 August 2008 at 16:35

A thought re FlexWoL policies written in trust for IHT purposes: the idea is to provide sufficient funds prior to Probate to fund the IHT due, but the delays in obtaining the transferred NRB may mean that the sum assured on such policies should ignore the second NRB – as the Revenue will also ignore it until the 216 form and all its requirements are received. Therefore higher sums assured required for such policies? Discuss.

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