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Inheritance Tax: Residence Nil Rate Band




Inheritance tax is payable upon death at the rate of 40% on the value of an individual’s net estate above the Nil Rate Band (NRB) of £325,000. From 9 October 2007 upon the death of a surviving spouse or civil partner, where the NRB of the first to die was not utilised in whole or part, it was possible to transfer the unused part of the NRB to the survivor’s estate. This could result in a maximum uplift to £650,000 of the estate of the surviving spouse or civil partner. This is known as the ‘transferable nil rate band’ (TRNB). For some people this has now been enhanced.


With effect from 6th April 2017, an additional £100,000 Residence Nil Rate Band (RNRB) has been made available on top of the NRB and TNRB. This sum will be increased by £25,000 per year so that by 2020/21, an additional £175,000 will be available. The NRB will remain frozen throughout this period. This means that for those spouses and civil partners who are able to meet all the required conditions, they can transfer the RNRB, the TRNB and the NRB between them so that their combined inheritance tax relief in 2020/2021 will be £1 million.


As you can imagine, there are a number of conditions that need to be met in order to benefit from this change.


·         The deceased must have had a home or share of one at their time of death or at some point since the policy was announced on 8th July 2015


·         If they had more than one residence the estate can elect which one to choose


·         If someone has sold or moved to a less valuable property since 8th July 2015 they may still qualify, at least in part, but full details of this are yet to be published


·         The deceased must have lived in the property at some point so it does not apply to investment properties, for example buy to let


·         RNRB is restricted if the value of the estate exceeds a threshold of £2 million. The additional allowance will be reduced over that sum on a tapering basis and will disappear if the estate exceeds £2.7 million.


As many of the details remain unclear and the conditions complicated to navigate through, advice should be taken to review existing wills to ensure they qualify if possible for all the relief available.



Geoffrey Ditz is a Partner and Private Client Practice Group Leader at JPC Law

For further information on this legislation, wills, trusts or probate, please contact him:


General Enquiries:


T: 020 7625 4424


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