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Dear Tutor,
I worked an example and I think that the answer given is incorrect. The question is as follows:
J & S were a married couple. S died in July 2008 and 65% of her nil rate band of £312, 000.(2008/2009) was unused. J died in May 2015. He had made a potentially exempt transfer (after all available exemptions) of £75,000 in August 2011. J left his estate to his sister. Any relevant elections were made.
What is the Nil Rate Band available to set against J’s death estate.
According to me, the answer is £202, 800 (unused NRB) + £325,000 – £75,000 = £452800.
But the answer in the book is £461,250.
Can you please explain me how they got this answer.
Extremely thankful to you.
The answer is correct and it is your answer that is wrong, I regret to tell you. When a spouse dies, the surviving spouse benefits from the % of the nil rate band unused not the amount (£) of the unused nil rate band. In this example therefore J will be entitled to 165% of the nil rate band available to J when he died (165% x 325,000 = 536,250 less the PET of £75,000 = £461,250)
Have you read the OT course notes and listened to the lectures on IHT?
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