Frequently asked questions

If the second of a married couple / RCP is UK domiciled at the time of their death, will his / her personal representatives be able to claim any unused nil rate band (NRB) of the first spouse/RCP to die even if, at the time of the first spouse/RCP’s death he / she was not UK domiciled?

Yes – it does not matter that the first spouse / RCP was non-UK domiciled at the time of his / her death. The claim would be based on the percentage of any unused NRB at the time of the death of the first spouse/RCPbut the monetary value of the NRB applicable at the time of the survivor’s death. The percentage of transferable NRB available will be calculated with reference to the value of the UK situs property owned by the first spouse at the time of their death which was neither subject to an exemption nor qualified for an IHT relief (100%). So, if none of the first spouse / RCPs estate was liable for UK IHT, the claim would be for 100%. This is illustrated by the following example:

Jennifer and Ernie emigrated to Canada in 1978 with the intention that it was to become their permanent home. They severed all ties with the UK and subsequently established a Canadian domicile of choice. Unfortunately, Jennifer died suddenly in 2005. At the time of her death she owned no UK situs assets. Bereft and distraught, in 2007 Ernie decided returned to the UK, resuming his domicile of origin in the process. He died in September 2008 leaving an estate valued at £500,000 but fortunately his personal representatives will be able to submit a claim to transfer Jennifer’s unused nil rate band. Because Jennifer’s estate was not subject to UK IHT, the personal representatives could claim to transfer 100% of Jennifer’s NRB.

It should be noted that the £55,000 restriction in the spouse / RCP exemption discussed previously does not apply where, at the time of the transfer, both the transferor and their spouse / RCP are domiciled outside the UK.