A: Each person has their own NRB. In general, it is not possible to transfer the NRB to someone else, even if some or all of the NRB is unused when the individual dies.
However, an exception is made in the case of married couples and members of a civil partnership. This means it is possible for the unused proportion of the NRB of the first spouse or civil partner to be transferred to their survivor. This means that any part of the NRB that is not used when the first spouse or civil partner dies can be transferred to the surviving spouse or civil partner for use on their later death. IHTA 1984, s 8A
Where HMRC accept a claim to transfer unused NRB, the NRB that is available when the surviving spouse or civil partner dies is increased by the proportion of the NRB unused on the first death.
In your client's case, when the husband dies his estate will be able to utilise by two nil rate bands. If he dies in 2022/23, the nil rate band available to his estate will be: £325,000 x 2 = £650,000.
Although these rules were introduced for deaths after 9 October 2007, it is only necessary for the second death to happen after October 2007. The first death could have happened many years before. If some part of the nil band was unused on this first death, the ‘transferable nil band’ rules will apply.
A claim needs to be made by the executors of the second spouse / civil partner. On the death of the first spouse / civil partner, the unused nil band is recorded but no claim is made.
These publications from Markel Tax were correct at the time of going to press and should be considered as principles-based guidance only. To check current validity, call the Markel Tax helpline. ICAEW (as distributor) disclaims all liability for any errors or omissions.
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