For an introduction to the residence nil rate band (RNRB), also known as the residential nil rate band or the additional threshold, see Practice Note: IHT—residence nil rate band. The RNRB is only available where a qualifying residential interest (QRI) is ‘closely inherited’ on the deceased’s death. It applies to deaths on or after 6 April 2017. For estates valued over £2m, the amount of the RNRB is tapered. ‘Inherited’ is defined as meaning that the property passes from a person who has died and the property formed part of their estate immediately before death. The disposition of the property may be effected by Will, under the law relating to intestacy or ‘otherwise’, which would include the passing of joint property by survivorship, a QRI passing by a deed of variation with the application of section 142 of the Inheritance Tax Act 1984

This Q&A assumes that there is no other QRI or qualifying former residential interest in the surviving spouse's estate which may enable the RNRB and transferable RNRB to be claimed in relation to their own estate on their death. This Q&A refers you to Practice Note: IHT—residence nil rate band, which sets out the conditions for the residence nil rate band (RNRB) and transferable RNRB to apply. Practice Note: IHT—residence nil rate band Q&As provides: 'Where a testator leaves a qualifying

The position relating to the availability of the residence nil rate band (RNRB) where there is a right of occupation of the property is dealt with in Practice Note: IHT—residence nil rate band Q&As, under the subsection heading ‘Property left to direct descendants with right of occupation for third party or a descendant’. We refer you to the following Q&A which is most relevant to the circumstances in this Q&A: Would the residence nil rate band be available where the deceased’s Will gives a right to occupy their

The residence nil rate band (RNRB) is an addition to the basic IHT nil rate band and is available for deaths on or after 6 April 2017 up to the value of a qualifying residential property interest (QRI) passing to qualifying beneficiaries, subject to the tapering provisions. For full details of the RNRB and how to claim it, see Practice Note: IHT—residence nil rate band. Various scenarios relating to the operation of the RNRB are considered in Practice Note: IHT—residence nil rate band Q&As. In particular, see the subsection titled ‘Option to purchase property from estate’. Where the deceased has left a QRI outright to direct descendants in their Will but with an option for one of the beneficiaries (who is also a direct

This Q&A requires a careful review of the relevant provisions of the inheritance tax (IHT) legislation. If A leaves their estate to their spouse B for life, this will qualify as an immediate post-death interest for IHT purposes. Consequently, the spouse exemption will be available on A’s death and the underlying trust assets are regarded as forming part of B’s estate on their death. A will not use up any of their residence nil rate band (RNRB) and so (subject to what follows) on B’s death there will be a brought forward allowance that can be added to B’s own allowance. If A’s estate

For information about the residence nil rate band and the conditions for it to apply, see Practice Note: IHT—residence nil rate band. The downsizing addition may be available where a qualifying residential interest (QRI) was disposed of on or after 8 July 2015 (section 8FB of the Inheritance Tax Act 1984 (Inheritance Tax Act 1984)), there is no QRI in the estate at death (IHTA 1984, s 8FB) and if Conditions G to K in IHTA 1984, s 8FB are satisfied. The residence nil rate band (RNRB) in the form of downsizing relief may be relevant to W’s estate, provided that the property was sold on or after 8 July 2015. However in order to claim the downsizing

The legislation providing for the introduction of the residence nil rate band (RNRB) is contained in: • the Finance (No 2) Act 2015 (F(No 2)A 2015), which received Royal Assent on 18 November 2016 and inserted new sections 8D–8M into the Inheritance Tax Act 1984 (IHTA 1984) • the Finance Act 2016 (currently published as the draft Finance Bill 2016) The provisions introduced by F(No 2)A 2015 focus on the structure, processes and calculation of the RNRB while those contained in Finance Bill 2016 explain how the RNRB will still be available to a person when they downsize or dispose of a property. The answer to your question can be found in IHTA 1984, ss 8D–8M, which provide that the RNRB will be available to use against the value of a qualifying

The residence nil rate band (RNRB) is a relief from inheritance tax (IHT) designed to enable the tax-efficient inheritance of the family home on death and is in addition to the basic NRB (see Practice Note: IHT exemptions and reliefs on death and lifetime gifts). It is being phased in with gradual increases over the next four years. For married couples and civil partners, any unused RNRB can be passed over to the estate of the surviving spouse or partner. Where it was not used in full on the first death, the unused portion can also be transferred. See Practice Note: IHT—residence nil rate band for more information. The RNRB is available only if a ‘qualifying residential interest’ (QRI) is ‘closely inherited’ under section 8J(2) of the Inheritance Tax Act 1984 (IHTA 1984). This is defined as being inherited

The residence nil rate band (RNRB) is an addition to the basic nil rate band (NRB), which further reduces the inheritance tax (IHT) payable on an estate on death. It is applied to the taxable value of the estate, but differs from the basic NRB in that it is restricted to: • the value of residential property or a qualifying residential interest (QRI) • the death estate, and • the inheritance of lineal descendants The QRI, or the portion of the value which is to be set against the RNRB, must be 'closely inherited'. 'Closely inherited' is defined as inherited by a lineal descendant, that is a child, grandchild and remoter issue. Beneficiaries may also include the widow, widower or surviving civil partner of a lineal descendant provided they have not remarried. A lineal ancestor,

This Q&A assumes that the intention is to leave the property on an interest in possession trust for the survivor (and not a mere right to occupation), with remainder passing to the children. The residence nil rate band and the surviving spouse The residence nil rate band (RNRB) takes effect for relevant transfers on or after 6 April 2017. The RNRB is in addition to the inheritance tax (IHT) threshold (basic nil rate band (NRB)) of £325,000. It introduces an additional NRB when a residence (specifically, a ‘qualifying residential interest’ (QRI)) is passed on death to direct descendants (ie the QRI must be ‘closely inherited’). A direct descendant of the deceased is: • a child (including an adopted child, foster child or stepchild), grandchild or other linear descendant (the person who inherits the home doesn’t

The residence nil rate band (RNRB) is an addition to the basic nil rate band (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: • the value of a residential property interest • the estate on death, and • the inheritance of lineal descendants Qualifying residential interest The RNRB is set against the value of a residential interest passing to qualifying beneficiaries. The main condition is that the deceased must have had an interest in a property which was occupied as that person's residence when they owned it and which would have been part of their estate (section 8H(2)–(3) of the Inheritance Tax Act 1984 (IHTA 1984)). Closely inherited 'Closely inherited' is defined as inherited by a lineal descendant, that is a child,

In answering this Q&A, we have assumed that there is only one qualifying residential interest (QRI), that the value of the QRI exceeds the residence nil rate band (RNRB) threshold, that the relevant net estate does not exceed the taper threshold and that there is no need to consider the downsizing addition. For an introduction to the RNRB, see Practice Note: IHT—residence nil rate band. The RNRB is only available where a QRI is ‘closely inherited’ on the deceased’s death. It applies to deaths on or after 6 April 2017. 'Inherited' is defined as meaning that the property passes from a person who has died and the property formed part of their estate immediately before death. The disposition of the property may be effected by Will under the law relating to intestacy or 'otherwise', which would include the passing of joint