The Inheritance Tax Transferable Nil Rate Band: Some Practical Points

 In Tax, Trusts

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IHT transferable Nil Rate Band practical pointsThis article focuses on the UK inheritance tax (IHT) transferable nil rate band (TNRB).  The author does not seek to address issues relating to the residence nil rate band, or the residence brought forward allowance, which are each a topic is their own right and, together, the subject of a number of recently published books.


The Finance Act 2008 amended the Inheritance Tax Act 1984 by the introduction of ss.8A-8C.  These provided for an individual’s unused nil rate band remaining upon their death to be utilised by any person (the Survivor) to whom they were married, or in civil partnership with, at the date of their death, so long as the Survivor died on or after 9 October 2007.

It does not matter when the individual (the Deceased) died, or their domicile for UK IHT purposes at the time of their death – provided the Survivor did not die before 9 October 2007 the TNRB will be available to their estate.

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Calculation of TNRB

The amount of the TNRB available to the Survivor will be proportionate to reflect the amount of the Deceased’s unused nil rate band (NRB).  For example, if, when the Deceased died the IHT nil rate band was £300,000 and following their death £150,000 was unused, the TNRB will be 50% of the NRB as at the date of death of the Survivor.  If only £75,000 of the Deceased’s NRB remained unused after their death, the Survivor’s estate would be entitled to a TNRB equal to 25% of the NRB as at the date of their own death.

If a Survivor is entitled to more than one TNRB as a result of the death of more than one spouse and/or civil partner, the available TNRBs may be aggregated subject to the total amount of TNRBs to which they are entitled not exceeding 100% of the NRB as at the date of death of the Survivor.

The current NRB is £325,000, so that the maximum TNRB to which a survivor’s estate may be entitled is £325,000

If, when the Deceased died their NRB was fully used, there will be no TNRB available to the Survivor.

Claiming the TNRB

A claim for TNRB may be made by:

  • the personal representative(s) (PRs) of the Survivor
    The claim should normally be made:
  • within 2 years of the end of the month in which the Survivor dies (e.g., if the Survivor died on 19 February 2018, a claim should normally be made by 28 February 2020 as the last day of the month of death was 28 February 2018), or
  • if later, within 3 months of the date the personal representative(s) first act as such, or
  • any such longer period as HMRC might in the particular case allow.


  • If no claim is made by the PRs, by any person liable to pay IHT upon the death of the Survivor (e.g. trustees of aggregable property, or the donee of a failed PET), within such period as HMRC might in the particular case allow.

Even where there may be no immediate reason to claim any available TNRB, PRs might consider doing so within 2 years of the Survivor’s death.  With the passage of time, if circumstances change giving rise to an IHT charge in the future, it may become more challenging to source the information required to support a claim (also mindful that any extension of time will be at the discretion of HMRC).

Order of application of the TNRB

The TNRB is added to the Survivor’s own NRB to form a composite nil rate band.  If the entirety of the combined NRB and TNRB is not fully utilised in the Survivor’s estate, to the extent that it does not exceed the Survivor’s NRB available immediately before their death, it may be claimed by the estate of any spouse or civil partner of theirs who survives them.


  1. Survivor has NRB of £250,000 and TNRB of £325,000. Taxable estate = £425,000

TNRB utilised in full together with £100,000 of NRB, leaving £150,000 of NRB available to the estate of their surviving spouse/civil partner.

  1. Survivor has NRB of £250,000 and TNRB of £325,000. Taxable estate = £100,000

£100,000 of TNRB utilised and remainder lost.  Unused NRB of £250,000 available to the estate of their surviving spouse/civil partner.

Use of TNRB

The TNRB cannot be used to reduce the IHT charge payable at the time any lifetime gifts are made.  However, it is taken into account when calculating any IHT due on failed PETs, and other lifetime gifts, where a charge to IHT arises in respect of them as a result of the Survivor’s death.

Where other property is aggregable with the Survivor’s estate (e.g. they have a qualifying life interest in a trust fund), as the combined NRB and TNRB form a composite nil rate band, the benefit of the TNRB is spread across all of the taxable titles in the same way as the normal NRB.

Testamentary Gifts defined by the nil rate band

Where a testamentary gift is defined by reference to the NRB, depending on the actual wording the gift may include the value of any available TNRB.  It is important PRs and their advisers recognise this as they could be liable to the disadvantaged beneficiaries if they fail to claim the TNRB to which the estate is entitled.

In The Woodland Trust v. Loring [2014] EWCA Civ 1314, the Court of Appeal held that a gift of “such sum as is at the date of my death the amount of my unused nil rate band for inheritance tax” included the value of the TNRB to which the testatrix’s estate was entitled.  This was despite the fact that the will in question was executed many years before the concept of the TNRB was even considered.

Some PRs might be tempted to “prefer” that an NRB gift includes, or does not include, any available TNRB in the light of, say, family circumstances (e.g. NRB to children and residue to step mother, or NRB to family members and residue to charity).  However, if that “preference” does not accord with the actual terms of the NRB gift, the PRs may find themselves responsible for making up any shortfall caused by such “preference”, together with any costs incurred in any dispute on the matter.

Where PRs are uncertain if an NRB gift is of the basic NRB or includes any available TNRB, they should seek appropriate advice.  Whilst HMRC has provided guidance on clauses that it considers gift “single” or “double” NRBs, HMRC also makes clear that it does not give legal advice to taxpayers.  Accordingly, PRs will need to consider whether it is safe to rely upon such guidance from HMRC or if they should seek legal advice specifically on the terms of the will they are administering.

Testamentary discretionary trusts

Where a will, or deed of variation, creates a relevant property trust which includes any element of the TNRB, this may have unexpected IHT consequences – when calculating exit charges and periodic (10-yearly) charges the amount of any TNRB claimed by the estate on death is excluded.  The amount of the NRB to be taken into account will be the Survivor’s NRB as it existed immediately before the Survivor’s death.

Whilst, in such situations, an appointment out of the trust could be made, relying on s.144 IHTA 1984 to apply to reduce the gift into the trust to the deceased survivor’s own NRB, this could undermine the testator’s intention in having created the trust in the first place.

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