Adam’s Technical – The Residence Nil Rate Band

I have covered the Residence Nil Rate Band (RNRB) a couple of times since it was first introduced in April 2017.

The RNRB started at an amount of £100,000. This figure rose gradually to reach £175,000 in April 2020. This gives individuals an Inheritance Tax free amount of up to £500,000. The nil rate band of £325,000 and the RNRB of £175,000.

A couple of points we feel worth reiterating are as follows:

• The RNRB is not available to individuals without a lineal descendant to pass the allowance onto. A lineal descendant is classed as: children (including adopted, step, fostered), grandchildren or a widow/widower of a lineal descendant.

• The amount available is the RNRB of £175,000 or the value of the house, whichever is lower.

• If an individual’s net estate (after any debts but before allowances or reliefs) is valued at more than £2 million their entitlement to the RNRB is reduced by £1 for every £2 the estate is over £2 million. From April 2020, when an estate reaches £2.35 million the RNRB, is no longer available.

If you wish to discuss, please contact your usual M&T adviser.

Adam.