»Ê¹ÚÌåÓýapp

To qualify for a downsizing addition (IHTM46050) not only must there have been a qualifying disposal, or a QFRI (IHTM46053), there must also be property or assets, other than the QRI, which are closely inherited (IHTM46013) on the death. Note, however, that there is no need for the assets which are closely inherited to have any connection to the property which has been disposed of. »Ê¹ÚÌåÓýappre is no requirement to trace of any sale proceeds from the disposal.

»Ê¹ÚÌåÓýapp downsizing addition can never exceed the value of the other property or assets which are closely inherited.

Example

Emma’s estate includes a residential property interest (IHTM46011) valued at £100,000 and £600,000 of other assets when she dies in May 2019. She leaves £50,000 to her grandchild with the rest of the estate to her niece. »Ê¹ÚÌåÓýapp residential enhancement (IHTM46022) at the date of death is £150,000.

»Ê¹ÚÌåÓýapp default allowance (IHTM46024) is equal to the residential enhancement, £150,000. »Ê¹ÚÌåÓýapp estate is below the taper threshold (IHTM46023) so there is no reduction in the default allowance.

»Ê¹ÚÌåÓýapp residential property interest (£100,000) is less than the default allowance (£150,000) so it is possible for a downsizing addition to arise.

»Ê¹ÚÌåÓýappre is property other than any QRI which is closely inherited (the £50,000 left to the grandchild), so any downsizing addition would be limited to £50,000.

Whether there is actually any downsizing addition in this case would depend on whether Emma had downsized or disposed of any residential property interest after 8 July 2015 and, if she had, whether this resulted in any RNRB being lost (the ‘lost relievable amountâ€�). »Ê¹ÚÌåÓýapp rules around calculating the lost relievable amount are at IHTM46059.