HMRC internal manual

Inheritance Tax Manual

IHTM43021 - Calculating the transferable nil rate band: how the amount to be transferred is calculated where there is a lifetime transfer

You should check the other guidance available on GOV.UK from HMRC as Brexit updates to those pages are being prioritised before manuals.

Where the first deceased dies with a cumulative total of lifetime transfers, the nil rate band is used against those transfers first. This reduces the amount of nil rate band that is available against the death estate and, in turn, that reduces the amount that may be available for transfer. 


Raj and Minal were married in 1955.

Raj died on 10 October 2002. He made lifetime gifts of £100,000 to his two children within the 7 years before he died. Minal died on 5 November 2007.

When he died, Raj’s estate was worth £400,000. He left legacies of £100,000 to his children and the residue (£300,000) to Minal.

Unused nil rate band calculation

The nil rate band on Raj’s death is £250,000, but this is not the maximum that could be transferred at nil percent on the first death, because of the chargeable lifetime transfers made. The maximum that could have been transferred at nil percent would be

£250,000-£100,000 = £150,000.

So the value to be used for M is £150,000.

The chargeable value transferred on the death is £100,000. So, VT is £100,000.

Transferable nil rate band calculation

E is therefore £150,000 - £100,000 = £50,000.

The percentage of nil rate band available to transfer is E ÷ NRBMD × 100 or

(50,000 ÷ 250,000) × 100 = 20.0000%

At the date of Minal’s death the nil rate band was £300,000.

This will be increased by the amount available to transfer

£300,000 + (£300,000 X 20%) = £360,000

So the nil rate band on the second death, in this case, will be £360,000