»Ê¹ÚÌåÓýapp

For the downsizing provisions to be in point, there must have been a ‘residential property interestâ€� (IHTM46011) in a person’s estate on or after 8 July 2015 which has either been disposed of, or downsized from, before the date of death. »Ê¹ÚÌåÓýapp legislation refers to this as a ‘Qualifying Former Residential Interestâ€� or QFRI (IHTM46053).

»Ê¹ÚÌåÓýapp cut-off date of 8 July 2015 means that any sale, gift or other disposal before that date cannot be taken into account.

»Ê¹ÚÌåÓýapp downsizing rules are designed to replace RNRB that has been lost due to the downsizing or disposal. »Ê¹ÚÌåÓýappy are not designed to replace RNRB that has been lost because a residential property interest in the estate on death is not closely inherited.

»Ê¹ÚÌåÓýapp downsizing addition will only be available if the value of any residential property interest at the date of death is below the default or adjusted allowance and some assets other than the QRI have been closely inherited. »Ê¹ÚÌåÓýapp downsizing addition cannot cause the RNRB to exceed the default or adjusted allowance.

In the same way that there can only ever be one QRI in an estate, there can only be one downsizing event taken into account. »Ê¹ÚÌåÓýapp legislation links this to the qualifying former residential interest or QFRI.

In most cases there will be a disposal of a single residential property interest and this will be the QFRI. But where the deceased had more than one residential property interest in the same dwelling-house, those interests can be combined as a single QFRI if they were disposed of on the same day.

»Ê¹ÚÌåÓýappre is no automatic entitlement to a downsizing addition. »Ê¹ÚÌåÓýapp deceased’s legal personal representatives (IHTM05012) need to make a claim for the downsizing addition (IHTA84/S8L) and they must nominate the disposal that they wish to be taken into account (IHTM46053). Form IHT435 is provided to make a claim for the downsizing addition.

»Ê¹ÚÌåÓýapp rules for making a claim for a downsizing addition are the same as those for claiming a brought-forward allowance. »Ê¹ÚÌåÓýapp guidance at IHTM46042 applies equally to a claim for a downsizing addition.