Residential Nil Rate Band

Please scroll down to read more

The residential nil rate band, also known as the RNRB, is a relatively new addition to UK inheritance tax law. It was introduced in April 2017 and provides an additional allowance for individuals who leave their main residence to a direct descendant upon their death.

The RNRB is in addition to the standard inheritance tax allowance, which is currently set at £325,000 per individual. The RNRB allows an individual to pass on an additional allowance of up to £175,000 (for the tax year 2021-2022) if certain conditions are met.

To qualify for the RNRB, the following conditions must be met:

  • The property being passed on must be the individual’s main residence.
  • The property must be left to a direct descendant, such as a child or grandchild.
  • The RNRB can only be used once, meaning that if the individual has more than one property, the additional allowance can only be applied to one of them.

It’s important to note that the RNRB is only available to individuals who pass away on or after 6 April 2017. If an individual passed away before this date, they are not eligible for the RNRB.

The RNRB is also subject to a tapering rule for estates worth over £2 million. For every £2 over this threshold, the RNRB is reduced by £1.

The RNRB is also subject to a tapering rule for estates worth over £2 million. For every £2 over this threshold, the RNRB is reduced by £1. In summary, the residential nil rate band is a valuable addition to inheritance tax law in the UK, providing an additional allowance for individuals who leave their main residence to a direct descendant. However, it’s important to ensure that the conditions are met and to consider the tapering rule for larger estates.