I T Residence Nil Rate Band


Danielle Harvey


The new IHT Residence Nil Rate Band (RNRB) was introduced in April 2017. It is in addion to an individual's own Nil Rate Band of £325,000, and condional on the main residence being passed down to direct descendants (e.g. children, grandchildren).


The RNRB will start at £100,000 and will increase by £25,000 each tax year unl 2020.


• • • •


£100,000 in 2017‐2018 £125,000 in 2018‐2019 £150,000 in 2019‐2020 £175,000 in 2020‐2021


The available allowance will be reduced if the value of the property is less than the maximum. Only one residenal property will qualify. It will be down to the personal representaves to nominate which residenal property should qualify, if there is more than one in the estate. A property which was never a residence of the deceased e.g. a buy‐to‐let, cannot be nominated.


The RNRB will be transferable between spouses and civil partners on death. For example, when combined with the full RNRB of £175,000 in 2020/21, this would provide a married couple with a possible £1,000,000 nil rate band, if they le their estate to each other on the first death and then on the second death to their children.


The RNRB will be reduced by £1 for every £2 that the deceased's net estate exceeds


10 info@lymingtondirectory.co.uk Explained


£2,000,000. This will mean that on its introducon there will be no RNRB available if the deceased holds assets of more than £2,200,000. This will rise as the RNRB rises.


The RNRB may be lost where the property is placed into a discreonary will trust for the benefit of the children or grandchildren. However, if a trust gives a child or grandchild an absolute interest or interest in possession in the home, the RNRB can sll be claimed.


The family home doesn't need to be owned at death to qualify; for example a person may have downsized or sold their property to move into residenal care. The RNRB will sll be available provided that:


a) the property disposed of was owned by the individual and it would have qualified for the RNRB had the individual retained it and the replacement property.


b) assets form part of the estate and pass to descendants. Downsizing or the disposal of the property has to have taken place aer 8th July 2015.


It is good pracce to review your Will on a regular basis to ensure that it carries out your wishes and that the legislave changes do not result in you paying extra inheritance tax. For example, missing out on the RNRB, by passing the family home into a discreonary trust.


If you would like to review your will, please do not hesitate to contact us.


DH 01590 643969 www.lymingtondirectory.co.uk


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