Residence Nil Rate Band

Using the Residence Nil Rate Band can significantly reduce the amount of inheritance tax payable on your estate.

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What is the Residence Nil Rate Band (RNRB)?

The residence nil-rate band (RNRB) is designed to counter the fact that the general nil rate band (NRB) has not increased in line with property prices over the years.

RNRB is an additional allowance that is transferrable between married couples and civil partners. It applies to a qualifying residential property held at death which has to have been the person’s main residence at some point. Downsizing allowances are available where the deceased had recently moved into a smaller home or been taken into care.

RNRB only applies when the property is left to linear descendants (ie children, step-children, adopted children or grandchildren). Only one property can qualify. The amount of RNRB available is limited to the value of the home that is left to the direct descendants. It is ‘’tapered’ away for estates worth in excess of £2 million. 

For a married couple or civil partners, both RNRB and NRB are passed on to the surviving spouse upon death. There is no inheritance tax on an estate passed between married couples and civil partners.

The RNRB started in 2017 and was phased in over four tax years. The 2023/24 RNRB threshold is £175,000.   

Example

A person dies with an estate valued at £490,000.

Estate value £490,000

Less NRB (£325,000) and RNRB (£175,000) (£500,000)

Tax liability Nil*

*Note that £10,000 of the NRB remains unused and could be transferred to the deceased’s spouse or partner.

Please let us know if you would like our help or advice on tax efficient ways to minimise your family’s exposure to inheritance tax. Call us on 023 9248 4356 or use the enquiry form opposite.

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