IHT—nil rate band (NRB) and transferable NRB
IHT—nil rate band (NRB) and transferable NRB

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

  • IHT—nil rate band (NRB) and transferable NRB
  • Nil rate band (NRB) and transferable nil rate band (TNRB)
  • Calculating the TNRB
  • Timescale for making a claim
  • People who can make the claim
  • How to make the claim
  • Continued use for NRB structuring in Wills
  • Relevance of domicile
  • Residence nil rate band (RNRB)

Produced in partnership with Lucy Edwards of Penningtons Manches LLP and now maintained by Lexis®PSL

Nil rate band (NRB) and transferable nil rate band (TNRB)

Each person's estate is exempt from inheritance tax (IHT) up to a certain threshold, called the nil rate band (NRB), which is £325,000 for the tax year 2019–20. It will be frozen at this level until 5 April 2021. Prior to 9 October 2007, if the value of the chargeable transfer on a person's death did not use up all of their available NRB (either because their estate was less than the NRB or was left to an exempt beneficiary) its tax-saving benefit would not be fully realised.

For example, it is common for spouses to leave their entire estates to each other under their Will (and in the absence of a Will, a significant amount, if not all of the estate, passes to the surviving spouse under the intestacy rules). The spouse exemption from IHT means that this is not a chargeable transfer and so would not use any of the NRB. As a result the NRB of the first spouse to die was often wasted and the survivor would only have their own NRB to set against the value of their combined estates on their death.

Under sections 8A–8C of the Inheritance Tax Act 1984