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Nadia died on 13 February 2004, leaving an estate valued at £275,400 for inheritance tax purposes. Nadia left 50% of her estate to her son and 50% to to her husband, Tareq.
Tareq subsequently died on 17 January 2023.
Neither Nadia nor Tareq made any lifetime gifts.
The inheritance nil rate band for the tax year 2003-04 was £255,000.
What is the maximum available nil rate band which can be used when calculating the inheritance tax payable in respect of Tareq’s estate?Nil rate band at Nadia’s death 255,000
Band utilised on Nadia’s death (£275,400 x 50%) (137,700)
Unused NRB on Nadia’s death 117,300
Percentage of NRB unused (£117,300/£255,000) 46%
Tareq’s NRB in 2022-23 325,000
Transfer of Nadia’s unused NRB (£325,000 x 46%) 149,500
Total NRB available 474,500WHY THE BAND IS USED ONLY FOR 137,400£ AT NADIA’S DEATH? HOW DOES THE FACT THAT HALF OF HER ESTATE IS GIVEN TO HER SON AFFECTS THE BAND UTILIZATION?
The NRB changes and therefore it is not the amount of NRB that isn’t used that is transfered but the % unused.
The transfer of hald the estate to her husband is exempt from IHT therefor only half of the estate (275,400/2) is taxable to IHT
275,400/2 = 137,700
NRB (137,700) – so no tax due at death.NRB – 255,000 less used 137,700 leaves 117,300 – ie 46%
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