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Where Taxpayers and Advisers Meet

Claiming for a NRB Discretionary Trust with IHT400

DLThomas
Posts:5
Joined:Thu Aug 04, 2022 12:53 pm
Claiming for a NRB Discretionary Trust with IHT400

Postby DLThomas » Thu Aug 04, 2022 2:46 pm

I am completing an IHT400 form for my mother’s estate.
My father died in 2010. According to solicitors’ letters accompanying his will, dated 2002, this set up a Nil Rate Band discretionary trust. My mother, my sister and myself are named as trustees.
I understand that, if valid, assets in this trust would not be considered part of my mother’s estate and, therefore, not liable for inheritance tax. We would like this to be taken into account by HMRC but are unsure how to communicate it using the IHT forms.
It seems any values entered in the IHT418 ‘Assets held in trust’ schedule should ultimately end up added to the IHT400 ‘Total chargeable estate’ value, which seems the opposite of what we want to claim.
The HMRC forum advised speaking to the HMRC Inheritance Tax Helpline about this. The helpline people suggested, hesitantly, that I send an accompanying letter – in addition to the relevant documents - with my IHT400 submission explaining that I wish the trust to be taken into account, if valid.
As the helpline people seemed a little unsure I wanted to ask, has anyone with experience of dealing with HMRC found that they will give consideration to accompanying letters or am I limited to trying communicate the situation using just the official forms?
Thank you.

AGoodman
Posts:1453
Joined:Fri May 16, 2014 3:47 pm

Re: Claiming for a NRB Discretionary Trust with IHT400

Postby AGoodman » Fri Aug 05, 2022 2:28 pm

You need to get some proper advice on this to ensure that the trust is constituted with some actual assets so that they are not included in your mother's estate.

It is not something that can be fixed by ticking a certain box. A covering letter to HMRC a la "please deduct £325,000 from the estate" is not the way to go and sounds extremely risky.

Finding a solution will involve sorting out your father's estate property, identifying assets to go into the trust and possibly getting them into the names of the surviving trustees. If your late father's assets were all transferred to your mother (and the trust was ignored) it may be more difficult.

DLThomas
Posts:5
Joined:Thu Aug 04, 2022 12:53 pm

Re: Claiming for a NRB Discretionary Trust with IHT400

Postby DLThomas » Fri Aug 05, 2022 3:40 pm

Thanks.
I was doubtful about the 'send an accompanying letter' advice and had started to suspect that the details of the trust contents needed to be made more specific.

DLThomas
Posts:5
Joined:Thu Aug 04, 2022 12:53 pm

Re: Claiming for a NRB Discretionary Trust with IHT400

Postby DLThomas » Fri Aug 05, 2022 4:56 pm

it actually appears that 50% of the value of my parents' house was specified as part of the trust. Unfortunately this leaves over half the trust value as unspecified assets.


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