Tx notes fa22 Final

Calculate the IHT payable as a result of Hamish’s death.
Additional Residence Nil Rate Band (as applicable to TX) 
For individuals dying from 6 April 2018 there is an additional residence nil rate band (£175,000 in 
2022/23). 
The residence nil rate band is ONLY available where a “main” residence is held within the death 
estate and is inherited by DIRECT descendants (children / grandchildren). The examiner has stated 
that a question will make it clear if the residence nil rate band is available. Therefore, you should 
assume that the residence nil rate band is only available if there is mention of a main residence.
The value of the main residence for this purpose is after deducting any repayment mortgage or 
interest-only mortgage secured on that property.
If a main residence is valued (after deduction of mortgage) at less than the available residence nil 
rate band, then the residence nil rate band is reduced to the value of the residence.
£ 
House
350,000
Personal chattels
95,000
Shares held in an ISA
16,000
Car
22,000
Life insurance policy on own life
200,000 (proceeds)
180,000 (MV)

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Illustration 4 
Sophie died on 26 May 2022 leaving an estate valued at £850,000. Under the terms of her will, 
Sophie’s estate was left to her children. The estate included a main residence valued at £325,000. 
The inheritance tax (IHT) liability is: 
The residence nil rate band of £175,000 is available because Sophie’s estate included a main 
residence, and this was left to her direct descendants.
Transfer of Unused Nil Rate Band (NRB): If any amount of a taxpayer’s NRB is unused on their death, 
then the proportion of their NRB that is unused will transfer to their spouse/civil partner.
Just as any unused normal nil rate band can be transferred to a surviving spouse/civil partner, the 
residence nil rate band is also transferable if unused. It does not matter when the first spouse died.