Commentary

I4.162 Residence nil rate band―introduction

IHT, trusts and estates

I4.162 Residence nil rate band―introduction

I4.162 Residence nil rate band―introduction

For the latest New Development, see ND.1891.

A residence nil rate band (RNRB) is, from 6 April 2017, available as an enhancement to the existing nil rate band to reduce the inheritance tax payable on death of a 'closely inherited main residence'1. The relief is given only against the chargeable transfer made on death and not against lifetime transfers which are chargeable on death (although see below as regards property subject to a reservation of benefit). It takes priority over the nil rate band32. However since the nil rate band and transferred nil rate band are applied to chargeable gifts in the order in which they are made, these will be set primarily against lifetime gifts made in the seven years prior to the death, and the balance then applied to the estate on death.

HMRC has published guidance how to apply the additional threshold on the operation of the RNRB.

Alongside this enhancement there is a relief (referred to as 'downsizing relief') available where a person has downsized to a less valuable residence, or sold their home prior to death and not purchased another. For details see I4.164.

The RNRB is applied to the taxable value of the estate in the same way that the nil rate band is applied except that it is only able to be used against the value of residential property included in the death estate which passes to direct descendants. The amount is RNRB is phased in and the full amount is only

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