IHT unused Residence Nil Rate Band (RNRB)
![Image to represent IHT unused Residence Nil Rate Band (RNRB)](https://cdn.informanagement.com/imglib/03c95895-2b6d-4539-84d0-a492d673ecaa.jpg?width=800)
The Inheritance Tax Residence Nil Rate Band (RNRB) is a transferable allowance available to married couples and civil partners when their main residence is inherited by direct descendants, such as their children or grandchildren.
The RNRB is available at a maximum allowance of up to £175,000 per person. This allowance can be transferred to a surviving spouse or partner if it remains unused. It is in addition to the existing £325,000 Inheritance Tax (IHT) nil-rate band.
Together with the current Inheritance Tax limit of £325,000, this allows married couples and civil partners to pass on property valued up to £1 million free of IHT to their direct descendants.
However, the transfer of the unused RNRB does not happen automatically; it must be claimed from HMRC when the second spouse or civil partner passes away. Typically, the executor of the estate will file a claim to transfer the unused RNRB from the estate of the first deceased spouse or civil partner. This transfer can also be claimed even if the first spouse or civil partner died before the RNRB was introduced on 6 April 2017.
It is important to note that the RNRB is tapered for estates valued over £2 million, even if the family home is left to direct descendants. For every £2 that the estate exceeds the £2 million threshold, the RNRB is reduced by £1, potentially eliminating the allowance entirely.
No Advice
The content produced and presented by Streets is for general guidance and informational purposes only. It should not be construed as legal, tax, investment, financial or other advice. Furthermore, it should not be considered a recommendation or an offer to sell, or a solicitation of any offer to buy any securities or other form of financial asset. The information provided by Streets is of a general nature and is not specific for any individual or entity. Appropriate and tailored advice or independent research should be obtained before making any such decisions. Streets does not accept any liability for any loss or damage which is incurred from you acting or not acting as a result of obtaining Streets' visual or audible content.
Information
The content used by Streets has been obtained from or is based on sources that we believe to be accurate and reliable. Although reasonable care has been taken in gathering the necessary information, we cannot guarantee the accuracy or completeness of any information we publish and we accept no liability for any errors or omissions in material. You should always seek specific advice prior to making any investment, legal or tax decisions.
Share this article