BR Guide FINAL 20 Feb

51 CASE STUDIES SCENARIO: Iris is a widow aged 85. She has inherited her deceased husband’s full NRB and RNRB. BR AND GIFTS Iris combines gifting and BR strategies: £300,000 SHE GIFTS £300,000 FROM HER INVESTABLE ASSETS TO HER FAMILY £500,000 SHE INVESTS £500,000 IN A BR ESTATE PLANNING SERVICE Gifts are made only three years before her death, so are failed PETs; but Iris has made no prior transfer in the seven years preceding the date of the gift and its value falls within the NRB so there is no further IHT due on the gift. £1 million HOME £1 million INVESTMENTS & OTHER ASSETS THAT DON’T QUALIFY FOR BR IRIS’ ESTATE: £2 MILLION With no IHT planning With a BR based estate planning service & gifting PROPERTY £1,000,000 £1,000,000 OTHER ASSETS (AFTER £150,000 SPENT) £850,000 £850,000 TOTAL ESTATE £1,850,000 £1,850,000 BR INVESTMENT £0 £500,000 NIL RATE BAND £650,000 £650,000 GIFTS USING NRB £0 £300,000 GIFT ALLOWANCE AVAILABLE £0 £6,000 REMAINING NRB £650,000 £356,000 RESIDENTIAL NIL RATE BAND (2020/21) £350,000 £350,000 TOTAL ALLOWANCE £1,000,000 £706,000 IHT FREE ASSETS £0 £500,000 TAXABLE ESTATE £850,000 £344,000 IHT PAYABLE £340,000 £137,600 RESIDUAL ESTATE £1,510,000 £1,712,400 IHT SAVING £0 £202,400 PLANNING SUMMARY IRIS’ ESTATE ON DEATH: £1,550,000 £1 million HOME £500,000 BR QUALIFYING ASSETS (BENEFITING FROM 100% IHT RELIEF) £50,000 REMAINING ASSETS £175,000 RNRB TRANSFER AVAILABLE (100% of her husband’s unused RNRB - he died in 2015, and if the person died before 6 April 2017, the unused RNRB threshold and total available RNRB threshold are both deemed to be £100,000 so the unused percentage is 100%.) 100% is applied to the RNRB threshold at the death of the second spouse: 100% x £175,000. IRIS SPENDS £150,000 BEFORE HER DEATH IN 2020 (AFTER 5 APRIL) TAXABLE ESTATE: £1 million home - £350,000 total RNRB = £650,000 £650,000 remaining home value + £50,000 remaining assets = £700,000 £700,000 - £356,000 total NRB = £344,000 100% IHT RELIEF, GIVING £200,000 IHT SAVING £200,000 Iris has left her home in her will to her direct descendants and can access RNRB. CASE STUDY 8 £650,000 of NRB available (Iris and husband) is reduced by £294,000 to £356,000 (after the value of the failed PET: less the year of the gift and the previous year’s annual gift allowance of £6,000) is offset against the value of the PET.