The Residence Nil Rate Band (RNRB) came into effect in 2017 and it is an additional inheritance tax allowance for deaths occurring after 6th April 2017.
In order to qualify you must own a property or a share in a property which you have lived in at some stage that you leave to your direct descendants (for example your children, grandchildren and stepchildren).
The RNRB for this current tax year is £125,000 and it will increase to £175,000 by 2020/1. It is claimed by individuals, meaning that, like the inheritance tax nil rate band (currently £325,000), it can be transferred between spouses if it is not used in whole or in part on the death of the first spouse.
The value of the RNRB is limited to the lower of the value of the property left to the direct descendants or the total RNRB available.
The RNRB can be claimed by those who have downsized or sold their property after 8 July 2015. The former home would have needed to qualify for the RNRB if it had been retained and at least some of the estate must be left to direct descendants
The RNRB may be lost if you do not own a property at your death, or if your direct descendants do not inherit on death, for example, the RNRB may be lost if your property is left on some forms of trust. There are also restrictions if an estate exceeds £2m.
If you have any questions Beers’ friendly and helpful team is always willing to help and are happy to hear from you. Simply contact us on 01548 857000 and 01752 246000.