• November 30, 2023
 Inheritance Tax Allowances: The benefits of claiming allowances on first death

Inheritance Tax Allowances: The benefits of claiming allowances on first death

It has long been considered best practice in standard Inheritance Tax (IHT) planning for a married or civil partnership couple to leave a legacy up to the maximum Nil Rate Band (NRB) to a discretionary trust. The residue is then left to the survivor – either absolutely, or upon an immediate post-death interest trust. This way, no IHT is payable following first death.

Some practitioners argue that since the introduction of the Transferrable Nil Rate Band (TNRB) in 2007, there is no longer a need for married or civil partnership couples to include a NRB discretionary trust in their wills; this can often prove short-sighted and the wrong decision for clients and their beneficiaries.

The benefits of NRB discretionary trusts today

There are many benefits of including an NRB discretionary trust in wills. At CTT Group, we champion the use of the NRB discretionary trusts and encourage our network of advisors to recommend them to their clients. Benefits of using NRB discretionary trusts in wills include:

  • The assets entering the NRB discretionary trust will not form part of any intended beneficiaries’ estates and therefore will not be subject to their IHT, divorce, creditor claims, or care home fees. This is particularly important given that the Residential Nil Rate Band (RNRB) tapers if the estate value exceeds £2m
  • The rate of growth in the value of the trust property is likely to go beyond that of the NRB, given that it is frozen at £325,000 until the 2028/29 fiscal year
  • The TNRB didn’t exist prior to 2007, therefore it’s not illogical to expect that this could be changed or removed entirely. An NRB discretionary trust will give the estate the ability to claim the NRB (or not) while it is still available

Claiming the RNRB on first death

With the Residential Nil Rate Band (RNRB) also transferable between married or civil partnership couples, those of us on the Estate Planning team are often asked, “What are the advantages to claiming the RNRB on first death?” The main benefits extend to the following scenarios:

  • If the estate value of the survivor exceeds £2m, then the available allowance will be subject to taper, meaning that the allowance is reduced or lost
  • The Qualifying Residential Interest of the survivor may be less than the allowance, thus limiting the RNRB claim
  • The RNRB didn’t exist prior to 2017 therefore it’s not unreasonable to expect that this could be changed or removed entirely. Use it or lose it

The takeaway

There are many advantages to claiming allowances on the first of a married or civil partnership couple to die. Automatically relying on the ability to transfer allowances may not always be in the best interests of the estate.

You cannot predict the future when you take a client’s instructions. By putting a flexible plan in place that can be adapted to fit the circumstances when all the facts are known (post-death), you’ll be able to guide them in writing a will that results in the best possible outcome for their beneficiaries.

Appointing CTT as professional executors or trustees ensures the above considerations are always taken into account. This way, you can be sure the estates we administer and trusts we manage are handled in the most tax-efficient manner for our mutual clients’ intended beneficiaries.

To access CTT’s professional estate planning services, including enlisting CTT as exors and trustees, call 01926 514 390 or click here for more information.

This article was submitted to be published by CTT Group as part of their advertising agreement with Today’s Wills and Probate. The views expressed in this article are those of the submitter and not those of Today’s Wills and Probate.

CTT Group


  CTT Group is an established Legal Services firm providing multi-disciplinary support for the UK’s Professional Adviser community. Their expertise spans multiple areas of Law, Estate Planning, Finance and Tax matters. CTT Group is recognised as a leading figure in the industry due to their wealth of experience and technical knowledge in the legal and financial sectors. CTT Group is made up of six areas: CTT Professional Services: A specialised knowledge hub designed for the Professional Adviser community and CTT Group members. The Professional Services team will provide you with a bespoke training and support package to suit any business. This includes the New entrants team, Training, Estate Planning Team, Professional Indemnity Insurance Service & the Resource Hub. CTT Tax and Trust: a premium support system for the Professional Adviser community, providing professional executor and Trustee services. They specialise in Estate Planning, Tax and Trust matters and have a wealth of knowledge and experience in delivering the right solutions for your clients. CTT Legacy Software: Ground-breaking legal software that will change how you work. Legacy was explicitly designed with you and your business in mind, so it will seamlessly align with your needs. It can also be tailored to suit your business needs, giving you complete control over your client journey. CTT Legal: Providing innovative and modern solutions to even the most complex legal problems. CTT Legal offer comprehensive Legal advice alongside CTT Law; an SRA-regulated law firm and strategic partner of CTT Group. This includes Residential and Commercial Conveyancing, Litigation, Document production, Client care, Professional Executor & Professional Executor. CTT Accountancy: A newly established Accountancy firm that will work in partnership with you and your business. CTT Accountancy is a practice of highly skilled and experienced accountants with expertise in trust matters, uniquely positioned to offer your clients a range of accounting services, whatever their needs. CTT Private Client: Offering individual professional advice to high-net-worth individuals with various financial situations. Their specialist team have a wealth of knowledge and will work with you to understand your requirements and provide bespoke advice. Click here for more information: https://ctt-group.co.uk/ Contact: CTT Group Tel: 01926 514 390 Email: enquiries@ctt-group.co.uk Address: CTT Group, Gables House 62 Kenilworth road Leamington Spa CV32 6JX