IHT—calculation of nil rate band and transferable NRB
IHT—calculation of nil rate band and transferable NRB

The following Private Client guidance note provides comprehensive and up to date legal information covering:

  • IHT—calculation of nil rate band and transferable NRB
  • Nil rate band
  • Transferable nil rate band
  • Maximising the transferable nil rate band

FORTHCOMING CHANGE: Following the Inheritance Tax Review Call for evidence and Survey, which ran from 27 April and 8 June 2018, the Office of Tax Simplification (OTS) published its first report on 23 November 2018 and its second report on 5 July 2019. In its second report, the OTS recommended a number of reforms to inheritance tax (IHT), including to the allocation of the basic nil rate band as regards failed potentially exempt transfers. Although it not yet known if any of the recommendations will lead to legislative changes, it is worth bearing the proposals in mind when considering and advising on IHT calculations. See News Analysis: Inheritance tax review—residence nil rate band should be key to reform.

This Practice Note sets out the principles under which the basic nil rate band (NRB) and the transferable NRB are calculated and applied on the death of an individual. It highlights some features of how the calculations apply in practice. For general information on the NRB, the transferable NRB and the residence NRB (RNRB) (also known as the additional threshold) and in particular how these reliefs are claimed and relevant deadlines, see Practice Notes: IHT—nil rate band (NRB) and transferable NRB and IHT—residence nil rate band.

Nil rate band

The NRB excludes a substantial portion of a deceased individual’s estate from the