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HMRC internal manual

Inheritance Tax Manual

Assessing: examples of calculations: calculation where there is quick succession relief (QSR)

The facts

Roger died in November 2012 with free estate (Entry A) of £200,000, all personal assets.

Roger also had a life interest in a Will Trust (Entry B), which passes on his death. The trust is valued at £300,000 at the date of Rogers’s death.

In his lifetime, Roger made chargeable lifetime gifts of £25,000 in June 2009.

There is no unused nil-rate band from the previous death of a spouse or civil partner to carry over to Roger’s estate.

QSR of £10,000 is due against the tax payable on Roger’s estate.

Calculate the available nil-rate band

The Inheritance Tax nil-rate band at the date Roger died is £325,000. There is no unused nil-rate band to add to this so the available nil-rate band is £325,000

Apply the available nil-rate band to any lifetime transfers first

The available nil rate band of £325,000 is used against the lifetime transfers of £25,000 first. This leaves £300,000 to be used against the death estate.

Find the chargeable value of the estate at the date of death

The chargeable value of the death estate, after deducting liabilities, exemptions and reliefs is £200,000 free estate plus £300,000 Will trust = £500,000.

Apportion the available nil-rate band

Because there is more than one entry (IHTM31011) we must apportion the available nil rate band of £300,000 between them, before we can work out the tax.

Entry A

£300,000 × £200,000 ÷ £500,000 = £120,000

Entry B

£300,000 × £300,000 ÷ £500,000 = £180,000

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Calculate the tax on Entries A and B:

Entry A

£200,000 - £120,000 × 40% = £32,000

Entry B

£300,000 - £180,000 × 40% = £48,000.

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Apportion the QSR between the entries

Entry A

£10,000 × £32,000 ÷ £80,000 = £4,000

Entry B

£10,000 × £48,000 ÷ £80,000 = £6,000

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Here we will raise death estate calculations for:

  • £28,000 (£32,000 - £4,000 QSR) at Entry A
  • £42,000 (£48,000 - £6,000 QSR) at Entry B