IHT—residence nil rate band

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

  • IHT—residence nil rate band
  • Calculation of the amount of the relief
  • Tapering provisions
  • Qualifying residential interests
  • Inherited and closely inherited
  • Settled property
  • Downsizing
  • Practical considerations and planning points
  • Making a claim

IHT—residence nil rate band

This Practice Note introduces the residence nil rate band (RNRB), which is also known as the additional threshold, residential nil rate band or residential property nil rate band. It explains what the RNRB is, the conditions for it to apply, how it is calculated and how it is claimed. While this Practice Note contains some links to worked examples, customers are encouraged to see Practice Note: IHT—residence nil rate band Q&As for extensive links to Q&As and worked examples of how the RNRB applies to various scenarios in practice.

The RNRB is an addition to the basic NRB, which further reduces the inheritance tax (IHT) payable on death. It is applied to the taxable value of the estate, but differs from the basic NRB in that it is restricted to:

  1. the value of a residential property interest

  2. the estate on death, and

  3. the inheritance of lineal descendants

The RNRB was introduced in the Finance Act 2015 (FA 2015), with refinements added by the Finance Act 2016 (FA 2016) and minor technical amendments introduced by the Finance Act 2019 (FA 2019). The detailed legislation is contained in the Inheritance Tax Act 1984 (IHTA 1984). Much of the initial commentary on the provisions focused on the complexity of the legislation, which to a large extent is the result of the specific political target of the

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