The Residence Nil Rate Band (RNRB) came into effect on 6 April
2017. This is an Inheritance Tax allowance which will be available
in addition to the standard Nil Rate Band, currently
£325,000, where the family home is left to children or
grandchildren. Whilst the legislation itself is rather complex,
here are five things you should know about the RNRB.
Amount of RNRB available
Although the RNRB came into force on 6 April 2017, it will be
phased in over the next four years. The RNRB will start at a
maximum allowance of £100,000 per person and will increase by
up to £25,000 each tax year until 2020. After 2020, the
maximum RNRB will increase in line with inflation (based on the
Consumer Prices Index).
Maximum RNRB available
Who qualifies for the additional RNRB?
An individual's estate will only be entitled to benefit from
the RNRB where:
An individual dies on or after 6 April 2017;
An individual owns a home, or a share of one, and this has been
occupied as their residence at some stage before their death
(although see later comments on downsizing); and
The home, or a share of it, is inherited by direct descendants
such as the deceased's children or grandchildren.
Larger estates may not benefit from the RNRB
Where the value of an estate is more than £2 million,
after deducting liabilities but before reliefs and exemptions are
applied, the RNRB will be tapered away or withdrawn completely. The
RNRB will be reduced by £1 for every £2 that the estate
exceeds the £2 million threshold and so, on the introduction
of the RNRB, there will be no RNRB available if the deceased had
assets of more than £2.2 million. This will rise to an estate
of £2.35 million in 2021-2021.
Transferring the RNRB between spouses
Similar to the standard Nil Rate Band, any unused RNRB will be
transferrable to a surviving spouse or civil partner. This rule
applies even when the first spouse or civil partner died before the
RNRB came into force (6 April 2017) and it does not matter whether
or not the first spouse to die owned a residence, or a share of
residence, at the time of their death. Therefore, there will always
be an additional 100% RNRB unless the estate of the first spouse
exceeded the £2 million threshold.
Where an estate does not qualify for the full RNRB, it may
benefit from an additional amount known as the 'downsizing
addition'. This is to help those individuals who have downsized
or sold their property. The downsizing addition will be available
The deceased disposed of a former home and either downsized the
property to a less valuable home, or ceased to own a home, on or
after 8 July 2015;
The former home would have qualified for the RNRB had it been
At least some of the estate is inherited by the deceased's
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The personal representatives, who are responsible for administering the estate of someone who has died, generally require a Grant of Representation to allow them to collect in, sell and distribute the deceased's assets.
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