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Where Taxpayers and Advisers Meet

domicile election and iht205

tiengodue
Posts:29
Joined:Sat Sep 05, 2020 10:01 am
Re: domicile election and iht205

Postby tiengodue » Tue Jan 05, 2021 11:44 am

You need to determine whether estate qualifies as an excepted estate. RNRB is irrelevant when doing this. Also DoV irrelevant for this purpose.

Both RNRB and DoV only relevant with respect to ultimate IHT liability.

IHT 435 is a Schedule to IHT 400 and would be attached to it.

DoV kept until needed to be produced.
Hi,

The DOV was thought of in terms of using the RNRB allowance by redirecting the property to the child rather than the surviving spouse.
But I understand even if the estate qualifies as excepted with no property going to a child at this moment in time an election can be made later following a dov so that the property then goes to a child and this then allows
a RNRB to be added to the second spouse estate once he dies.

maths
Posts:8237
Joined:Wed Aug 06, 2008 3:25 pm

Re: domicile election and iht205

Postby maths » Tue Jan 05, 2021 3:49 pm

What is the value of the deceased spouse's estate?

What is the value of the residence ?

maths
Posts:8237
Joined:Wed Aug 06, 2008 3:25 pm

Re: domicile election and iht205

Postby maths » Tue Jan 05, 2021 3:51 pm

Did the deceased spouse won the residence 100%?

tiengodue
Posts:29
Joined:Sat Sep 05, 2020 10:01 am

Re: domicile election and iht205

Postby tiengodue » Tue Jan 05, 2021 3:52 pm

313 cash and 90k property.
currently going to surviving spouse via will
note that deceased is dom but deceased is non dom

we don't want to lose the RNRB as non dom estate is over 500k as it is (I mean without dead spouse estate)

maths
Posts:8237
Joined:Wed Aug 06, 2008 3:25 pm

Re: domicile election and iht205

Postby maths » Tue Jan 05, 2021 4:11 pm

The RNRB is transferable.

Given your figures no IHT arises on the first death and no RNRB is used.

Thus on death of second non-dom spouse he/she is able to take advantage of a transferable RNRB thus doubling the RNRB available.
In addition, some part of the nil rate band of the first spouse to die can also be transferred.

tiengodue
Posts:29
Joined:Sat Sep 05, 2020 10:01 am

Re: domicile election and iht205

Postby tiengodue » Tue Jan 05, 2021 4:13 pm

The RNRB is transferable.

Given your figures no IHT arises on the first death and no RNRB is used.

Thus on death of second non-dom spouse he/she is able to take advantage of a transferable RNRB thus doubling the RNRB available.
In addition, some part of the nil rate band of the first spouse to die can also be transferred.
many thanks

tiengodue
Posts:29
Joined:Sat Sep 05, 2020 10:01 am

Re: domicile election and iht205

Postby tiengodue » Tue Jan 05, 2021 4:15 pm

The RNRB is transferable.

Given your figures no IHT arises on the first death and no RNRB is used.

Thus on death of second non-dom spouse he/she is able to take advantage of a transferable RNRB thus doubling the RNRB available.
In addition, some part of the nil rate band of the first spouse to die can also be transferred.
many thanks
My assumption is that the action taken upon death of second spouse can only take place if in the mean time a dov has redirected the 1st spouse to die property to a direct descendant.

maths
Posts:8237
Joined:Wed Aug 06, 2008 3:25 pm

Re: domicile election and iht205

Postby maths » Tue Jan 05, 2021 5:42 pm

Redirecting property to children on first spouse death is likely to result in an overall IHT charge on both spouse deaths which is higher than leaving spouse estate as it is.

tiengodue
Posts:29
Joined:Sat Sep 05, 2020 10:01 am

Re: domicile election and iht205

Postby tiengodue » Tue Jan 05, 2021 7:57 pm

Redirecting property to children on first spouse death is likely to result in an overall IHT charge on both spouse deaths which is higher than leaving spouse estate as it is.
I am confused now.

I thought that in order to claim RNRB children need to inherit the property?
If a few years pass then a dov later will not be allowed, I thought the deadline was 2 years from death.

tiengodue
Posts:29
Joined:Sat Sep 05, 2020 10:01 am

Re: domicile election and iht205

Postby tiengodue » Tue Jan 05, 2021 7:59 pm

Redirecting property to children on first spouse death is likely to result in an overall IHT charge on both spouse deaths which is higher than leaving spouse estate as it is.
I am confused now.

I thought that in order to claim RNRB children need to inherit the property?
If a few years pass then a dov later will not be allowed, I thought the deadline was 2 years from death.

The dead spouse is domiciled in the uk but the surviving spouse is non dom.


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