You may or may not be aware that with effect from the 1st March 2011 new regulations were introduced by HMRC to allow for the TNRB for deaths on or after 6th April 2010. An estate entitled to claim TNRB can now qualify as an “excepted case” if it is below (currently) £650,000 and avoid the need for an IHT400.
HMRC have produced a new TNRB form IHT217 for use with the IHT205.
What follows is an extract from the HMRC’s form IHT206 explanatory notes regarding the new process:
“Since 9 October 2007, it has been possible for spouses and civil partners to transfer their unused nil rate band. This means that any part of the nil rate band that was not used when the first spouse or civil partner died can be transferred to the surviving spouse or civil partner for use by their estate on their death.
New rules mean that if the whole of the nil rate band is available to transfer to the estate of the second spouse or civil partner to die and you need to claim the transferred nil rate band you may still use the excepted estates procedures if certain rules apply. These rules are that:
- the person who has died now, died on or after 6 April 2010.
- their spouse or civil partner who died before them died on or after 13 November 1974.
- when the spouse or civil partner died their estate did not use up all of the nil rate band available to it so the whole, or a proportion of, the nil rate band is available to transfer.
- the estate of the person who has died now is valued at less than two times.
- the excepted estate limit and IHT205(2006) is being filled in.
An example of when the whole of the nil rate band is available to transfer:
Ralph died leaving a widow, Rita. All of Ralph’s estate valued at £300,000 passed to Rita under the terms of Ralph’s will. As everything that passes to a surviving spouse or civil partner is exempt from Inheritance Tax, all of the nil rate band is available to transfer to Rita’s estate when she dies.
If the whole of the nil rate band is available to transfer that means that the estate of the spouse or civil partner who dies second has double the nil rate band before any Inheritance Tax becomes payable.
It also means that the excepted estate limit for the estates that qualify is effectively doubled. For the tax year 2010-2011 this is £650,000.
If this applies to the estate you are dealing with you should fill in form IHT205(2006) and IHT217 to claim the transfer.”
When handling the new forms the Probate Registry will check only that the IHT205 is signed and that one of the options in the declaration on page 4 has been ticked.
If no option has been ticked your form will be returned.
If option two has been ticked you must file form IHT217 with the IHT205.
Should practitioners file an IHT205 with an IHT402 instead of the new IHT217 you will be asked to file the correct IHT217; they cannot be mixed.
Although the new IHT205 and IHT217 are accessible on the HMRC website I believe that they are also now available in hard copy via the HMRC helpline.