Using inheritance tax allowance from first death

A question about : Using inheritance tax allowance from first death

On the subject of being able to use the inheritance tax exemption from the estate of the first deceased spouse, I got an email from the Nationwide the other day with a link to the following article:

https://your.nationwide.co.uk/your-ne...0114-6694.aspx

This is an extract from it:

Myth 4: If your spouse or civil partner dies, your IHT threshold automatically doubles

Assets that pass between married couples or civil partners aren’t subject to IHT, and once they have passed from one to the other, the surviving spouse or partner has the right to add up to 100% of their partner’s IHT allowance to their own, currently protecting up to Ј650,000 in assets from the tax. However, it’s important to remember that this doesn’t happen automatically. The surviving party must apply for the IHT allowance to be transferred over. If they don’t do this, their heirs will be left with the task of proving they are entitled to the higher threshold. If their other half had died many years earlier, this could turn out to be quite a complicated task that involves legal expenses.

I did not know about the bit I have highlighted in the middle of the Myth 4 paragraph, but it looks an important consideration. How does one go about applying for the IHT allowance to be transferred over? Via the Probate Office? Via your solicitor?

Best answers:

• This seems to be saying that a widow/widower can apply for the transfer of the deceased spouses unused IHT allowance.
  Apply to the Inland Revenue? It would make planning easier for a lot of people if they could establish whether this transfer is possible. I'm thinking here about those with questions over their domicile.
  I've not seen anything about this on the .gov website though. Is there a form somewhere?
• The Nationwide article is saying that this could be done before the surviving spouse dies. Their Myth 4 paragraph is about how it is better not to leave it until the 2nd death.
  Is this a new thing?
• It sounds as if it's their Myth 4 that's a myth.
• What the survivor can do before they die, or the executors of the first to die can do before the survivor dies, is establish how much of the IHT allowance is available to be passed on.
  We took some advice from an accountant when Dad died, and therefore had a figure and percentage available for how much IHT allowance we could use when Mum died.
  Perhaps the real myth is that the IHT of the survivor is doubled, regardless of what happened to the estate?
• You do the transfer as part of completion of the IHT400 and additional schedules - specifically IHT402:
  "Transfer of unused nil rate band
  Fill in Schedule IHT402 Claim to transfer unused nil rate band if the
  deceased died on or after 9 October 2007, they had a spouse or civil
  partner who died before them and you wish to claim a transfer of unused
  nil rate band to add to the nil rate band on the deceased's estate.
  This will apply if the estate of the spouse or civil partner who died first
  did not use up all of the nil rate band available, usually because most of
  the estate passed to the surviving spouse or civil partner or the estate was smaller than the nil rate band at the time of the first death. You have 24 months after the end of the month in which the deceased died to make the claim."
• Myth 4 seems a bit misleading in that it says the surviving spouse must apply for the allowance to be transferred over, as though you have to approach some official body or other prior to the second spouse's death, whereas it sounds from the government website that in actual fact you should get the necessary information automatically from whoever deals with the estate of the first to succumb.
  It all does seem to depend though upon the surviving spouse keeping the information easily to hand for his/her heirs when the time comes, and I imagine not all that many people know that this is important, or even that such information may exist.
• This seems a pretty definitive treatment, albeit somewhat heavy-going!
  https://www.step.org/nil-rate-band-transfer
  I've yet to get to dealing with this aspect of my Dad's estate - but I'm hopeful it will be straightfoward, in as much as, AFAIK, everything passed to him on my Mum's death, and her estate was handled by a probate specialist, so there are good accounts (which were one of the first things I removed from his house for safekeeping!)
• Ferger's responses echo my thoughts.
  I didn't find it difficult to transfer the unused NRB when administering my mother's estate, although I had had no involvement in my father's estate, and there was very little paperwork available.
  All I needed was a copy of his will and death certificate along with the IHT402.
  So no forward planning, no complicated calculations, no reams of papers.
  The myth appears to me to be that administering an estate is too difficult for the layperson!
• Seems there are 2 more myths generated by the article)
  Myth 1. no mention of IHT paid by instalment if property involved
  Myth 3. fail to mention that tapering only happens when gifts are over the nil rate band