Commentary

I4.164 Residence nil rate band―downsizing provisions

IHT, trusts and estates

I4.164 Residence nil rate band―downsizing provisions

I4.164 Residence nil rate band―downsizing provisions

Provisions were introduced to prescribe the circumstances in which an increased residence nil rate band (RNRB) will continue to be available where a person has disposed of a residence in which they lived at some stage1.

For information on the RNRB generally see I4.162 and I4.163.

The legislation operates through a series of equations and it is regrettable that something of such public interest has become an algebraic exercise far beyond the understanding of many people. It applies for deaths on or after 6 April 2017 where the home was disposed of after 7 July 2015.

The legislation envisages two different circumstances where a downsizing addition will be available:

Firstly where the deceased downsized from a more valuable residence to a less valuable residence, and secondly where a residence was sold and no other residence was purchased. Where an interest in more than one former residence has been disposed of after 7 July 2015, the personal representatives (PRs) can nominate which residence is to be used for this relief2.

If the taxpayer makes one lifetime disposal after that date of an interest in the nominated property, or makes two disposals on the same day (for example, the person might have owned half of the residence outright and only had a right to live in the other half during their lifetime), but in either case makes no other disposal, that disposal (or those disposals) are the disposals of a qualifying former residential interest for the downsizing relief3. Otherwise if

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