Chapter 16 - Death Estate and Valuation Flashcards
How do you calculate the RNRB?
Lower of:
1) 175,000
2) Value of the property
How should you apply the related property valuation rules in the exam?
Calculate both the valuation as if there is no related property AND as if there is related property, then select the higher valuation.
In what circumstances do you use the RNRB?
1) Deaths on or after 6 April 2017
2) Any residential property left to descendants and their spouses.
3) Property must have at some point been the home of the deceased.
RNRB reduced by £1 for every £2 that the estate exceeds £2m.
How does the transfer of the NRB work?
Allows claim to be made for the unused NRB upon death of the first spouse, to be transferred to surviving spouse when they die.
The surviving spouse’s NRB is increased by proportion of dead spouses NRB that was unused at death:
(Remaining NRB after 1st spouse’s death estate calc. / NRB in force at their death) (%).
Can be used on death tax and death estate calcs for surviving spouse.
How does transfer of RNRB work?
Allows claim to be made for the unused NRB upon death of the first spouse, to be transferred to surviving spouse when they die.
The surviving spouse’s RNRB is increased by proportion of dead spouses RNRB that was unused at death:
(Remaining RNRB after 1st spouse’s death estate calc. (less any tapering) / RNRB in force at their death) (%).
Can be used on death estate calc. for surviving spouse.
What is Quick Succession Relief?
Relief (on the death estate) when the recipient of a chargeable transfer dies within 5 years of IHT being charged on the transfer (i.e. them dying).
Item does not have to be held on B’s death.
What is the relief calculation for Quick Succession Relief?
Tax paid on first transfer x(Net transfer / gross transfer) x relevant %.
Relevant % - One year or less = 100% relief, 2 years or less = 80% relief, 3 years or less = 60% relief etc. >5 years then no relief.
