The residence nil rate band (RNRB) is set to increase today (6 April 2018), making it even more important to ensure that your clients are aware of the benefits it could provide.
On top of the existing inheritance tax allowance of £325,000, the RNRB provides an additional amount; from today (6 April 2018), the band will rise by a further £25,000, taking it up to £125,000. By the tax year 202-21, a couple will have a collective tax free allowance of up to £1 million.
Someone’s estate will be eligible for the RNRB if it includes an interest in their main property of residence and is left to direct descendants.
Any unused allowance can be transferred between married couples or civil partners, much like the existing nil-rate threshold.
It’s worth noting that for the purposes of the RNRB, ‘inherited’ refers to gifts by will, that which is a result of intestacy as well as any jointly owned assets which pass to the surviving owner.
Where a gift is made into certain types of trust, such as discretionary, the RNRB will not apply. This is regardless of whether the beneficiaries are direct descendants. However, this does not always mean that eligibility for the RNRB is ruled out completely.
To find out more about the residence nil rate band, please click here.
