Residence Nil Rate Band

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

For a free initial meeting to discuss how we can help you contact us online or call us on T: 023 9248 4356T: 023 9248 4356


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How does the Residence Nil Rate Band (RNRB) work?

A transferable nil-rate band has been introduced in order to take the family home out of inheritance tax for all but the wealthiest.

If someone dies on or after 6 April 2017 and their estate is above the basic inheritance tax threshold of £325,000, and includes a property, the estate may be entitled to an additional threshold before any inheritance tax becomes due.

The property has to be left to children or grandchildren etc to qualify and is tapered away for estates with a value in excess of £2 million.  Downsizing allowances are available where the deceased had recently moved into a smaller home or been taken into care.

The threshold is to increase yearly as follows:

2017 to 2018 £100,000
2018 to 2019 £125,000
2019 to 2020 £150,000
2020 to 2021 £175,000

Example:

Individual A dies between April 6 2018 and April 5 2019.  His estate is worth £500,000, included within this is a property valued at £350,000 (enabling the nil rate residence relief to be utilised).

   £        £
 What relief is available to Partner A?    
 Estate value    500,000
 Basic inheritance tax threshold  325,000  
 2017 to 2018 RNRB  125,000  
 Total tax free threshold   (450,000)
 Remainder of taxable estate      50,000       @ 40% = £20,000 inheritance tax liability

 

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

For more information visit our inheritance tax page.

If you are interested in becoming a client of Morris Crocker, contact us on 023 9248 4356 or alternatively you can complete the request a quote form opposite.

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