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HMRC internal manual

Inheritance Tax Manual

Basic Definitions: ‘Closely Inherited’

For RNRB to apply, qualifying property must be ‘closely inherited’. In general this means that the property must be inherited (IHTM46014) by a child of the deceased, or by a remoter lineal descendant of the deceased (e.g. the grandchild, great grandchild, or other child of a child of a child etc). However the range of people who may be a qualifying beneficiary includes more than just the natural children, grandchildren and remoter lineal descendants of the deceased.

The legislation (IHTA84/S8K) extends the meaning of ‘child’ to include step-child, foster child and children for whom a person was appointed by a court order as a guardian or special guardian if that appointment took effect when the child was under the age of 18.

So, for example, Anne had a son, Jeremy. Jeremy becomes a special guardian for Mia, at a time when Mia is under the age of 18. For the purposes of IHTA84/S8K, Mia is a child of Jeremy, who in turn is a child of Anne, so Mia is treated as a lineal descendant of Anne for the purposes of RNRB.

The legislation also extends the range of qualifying beneficiaries to a person who:

  • is the spouse or civil partner of a lineal descendant at the deceased’s date of death, or
  • who was the spouse or civil partner of a lineal descendant, but the lineal descendant died before the death of the deceased and the surviving spouse or civil partner has not subsequently married or entered into a new civil partnership.

Property passing to the parents, brothers and sisters, nephews and nieces or other non-lineal descendants of the deceased is not ‘closely inherited’.