Inheritance Tax Nil Rate Band (NRB) and the Residence Nil Rate Band (RNRB)

The current NRB is £325,000 – which means that on death, if your assets are valued under this amount, you will not be liable for Inheritance Tax. Anything above this amount is chargeable to Inheritance Tax at the rate of 40% (unless there are other exemptions or reliefs that can be applied).

If you are married or are in a civil partnership and on your death you leave everything to your spouse, the NRB can be transferred to your spouse. Therefore, on the second death, there will be a total NRB available of £650,000. This is because transfers between spouses are exempt from Inheritance Tax.

Since 6th April 2017, there has been an additional Nil Rate Band available for those who own all or part of a home, which has been left to a direct descendent:- the ‘Residence Nil Rate Band’.

For deaths on or after 6th April 2017 the band was introduced at £100,000, rising £25,000 per year. Therefore, for the current tax year of 2019-2020, a further £150,000 can be claimed where the criteria is satisfied. The maximum amount, at the time of writing, will be on 6th April 2020 when it will be £175,000. Again, this is transferable between spouses.

Applying the RNRB is by no means simple and there are many conditions that will need to be satisfied for it to apply, but potentially there will be a total nil rate band of £1m available, on the second death of a spouse.

For more information or to review your Will, contact our private client department.

For more information on Inheritance Tax Nil Rate Band and the Residence Nil Rate Band

Contact our Private Client Department on 01206 577676 or email [email protected]