Residential Nil Rate Band Increase (6 April 2020)

The Residential Nil Rate Band (RNRB) was originally introduced in April 2017 as an additional Inheritance Tax (IHT) allowance, with the aim of allowing families to pass on up to £1m of their estate without IHT becoming payable. The RNRB allowance has been increasing each April, until reaching its maximum allowance claimable at £175,000 per person on the 6th April 2020.

Just like the Nil Rate Band allowance (NRB) that is available (currently set at £325,000 per person), the RNRB is transferable on death between spouses and civil partners.

The RNRB is available when residential property is left to direct descendants (children), however direct descendants can also include adopted children, foster children and stepchildren, or linear descendants (grandchildren). If you do not have any direct descendants, this allowance cannot be claimed.

Where there is more than one property forming part of the deceased’s estate, the executors can decide which property the RNRB will be applied to. However, the deceased must have lived in the property at some point during their lifetime for the RNRB to be applied. A property, such as a buy-to-let would not qualify for the RNRB allowance.

It is important however to be aware that large estates may not see the benefit of the RNRB, as the allowance is reduced by £1 for every £2 that is exceeding the £2m threshold.

Contact Heritage Will Writing on 02380 879243 or email info@heritagewillwriting.co.uk to arrange a no obligation telephone call to discuss your requirements.