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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
Updated
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Calculating the transferable nil rate band: survivor has been married to more than one spouse or been in more than one civil partnership

Where a surviving spouse or civil partner has been married more than once, or has been in more than one civil partnership and has survived both or all of their spouses or civil partners that died before them the amount of unused nil rate at each previous death can be carried forward to the later death under IHTA84/S8A(6)(b). This is limited to a maximum of 100% of the nil rate band at the death of the surviving spouse or civil partner under IHTA84/S8A(5) [IHTM43031]. 

Example

Mei married Cheng in 1970. Cheng died on 7 May 2002 leaving legacies of £100,000 to his children and the residue (£300,000) to Mei.

Unused nil rate band calculation

M = £250,000

VT = £100,000

M is greater than VT by £150,000

Transferable nil rate band calculation

E =£150,000

NRBMD = £250,000 so

(150,000 ÷ 250,000) × 100 = 60.0000%

So there is 60% of Cheng’s nil rate band available to transfer to Mei. Mei was married for a second time to Jack and again survived her husband who died on 7 September 2005. Jack left £220,000 to a niece with the residue (£80,000) to Mei.

Unused nil rate band calculation

M = £275,000

VT = £220,000

M is greater than VT by £55,000

Transferable nil rate band calculation

E =£55,000

NRBMD = £275,000 so

(55,000 ÷ 275,000) × 100 = 20.0000%

Mei died in January 2008 so the nil rate band available on her death is

£300,000 + (300,000 x 60%) + (300,000 x 20%) = £540,000