IHTM06024 - Rules about excepted estates: when the nil rate band may be doubled by a claim to transfer unused nil rate band
For deaths on or after 6 April 2010, an estate which can benefit from the transferable nil rate band (TNRB) (IHTM43001) may qualify as an excepted estate. The regulations contain detailed conditions about when TNRB may be claimed and restrict it, so it only applies in the most straightforward of circumstances.
For unused nil rate band to be transferred from the earlier death, the following conditions must be met
- the deceased survived the earlier death of their spouse or civil partner and was married to, or in a civil partnership with, them at the earlier death,
- for deaths from 6 April 2010 to 31 December 2021, none of the nil rate band was used by the earlier death, so that 100% is available for transfer. For deaths on or after 1 January 2022, a claim can be made provided some of the nil rate band was unused on the earlier death,
- a valid claim is made (IHTM06025) and is in respect of one earlier death only, and the first deceased person died on or after 13 November 1974 where the deceased was the spouse of the first deceased person, or on or after 5 December 2005 where the deceased was the civil partner of the first deceased person.
The estate of the first person to die must also meet the following conditions
- the first to die was domiciled in the United Kingdom when they died,
- their estate consisted only of property passing under their Will or intestacy, and jointly owned assets,
- if their estate included foreign assets, their gross value did not exceed £100,000, and
- agricultural relief (IHTM24000) and business relief (IHTM25000) did not apply.
It follows that an estate cannot claim TNRB where the estate of the first person to die included
- settled property,
- a gift with reservation of benefit (IHTM14301),
- an alternatively secured pension fund (IHTM17350), or
- any chargeable lifetime transfers, which must be calculated by ignoring agricultural and business relief and, for deaths after 1 March 2011, ignoring normal out of income exemption where the exemption exceeds £3,000 per tax year.
Where an estate meets the above conditions and a valid claim is made, if the estate is a low value estate (IHTM06012), the gross value of the estate must not be more than double the nil rate band.
If the estate is an exempt excepted estate (IHTM06013), the gross value of the estate cannot exceed £3m (£1m for deaths before 1 January 2022) and the net chargeable value of the estate, after deduction of liabilities and spouse or civil partner exemption and/or charity exemption only, must not be more than double the nil rate band.
There are some examples to show how these rules operate at IHTM06026.