skip to Main Content

What is the Residential Nil Rate Band? (RNRB)

From 6 April 2017, the Residential Nil Rate Band (RNRB) will be available for residences inherited by direct descendants (see below) in addition to the existing Nil-Rate Band (NRB) which is currently £325,000.

From 2017/18 the RNRB will be phased in, at this point the sum which will be able to be claimed is £100,000, increasing by £25,000 each year until 2020/21 when it reaches £175,000. The current rate of NRB will be frozen at £325,000.00 during this period.

As with the NRB, any unused RNRB can be transferred to a surviving spouse or civil partner, with the effect that the maximum combined IHT threshold for such couples will be a total of £1m by 6 April 2020.

In what circumstances does the RNRB apply?

The application of the RNRB is complex but, in basic terms, the RNRB may be available where:

  • An interest in a property which has been used as a residence by an individual (at the date of the individual’s death (and/or its sale proceeds)
  • is left on the individual’s death
  • to or for the benefit of this direct descendants
  • the value of the deceased’s estate is within a permitted range of values.

Some tips and traps

    1. The RNRB only applies to transfers on death, not during lifetime
      Consequently it will not apply to lifetime gifts when the donor dies within seven years. However, the RNRB will be available for property treated as being part of the deceased’s estate because they have made a lifetime gift but retained some benefit from the gifted property.
    2. The property does not need to be left by Will
      The RNRB may also apply on intestacy or where joint property passes by survivorship.
    3. It is not necessary for the property to have been the deceased’s main residence (or his residence at the time of his death)
      Instead, it is sufficient that it has been used as his residence at some point during his ownership.
    4. The RNRB is only available in relation to one property
      If the deceased had more than one residence, his personal representatives can nominate which is to benefit from the RNRB.
    5. ‘Direct descendant’ is defined widely
      It includes stepchild, adopted child and foster child. It also includes the spouse or civil partner, or a widow/widower or surviving civil partner who has not remarried, of a direct descendant.
    6. Certain trusts for direct descendants will not qualify for the RNRB
      If a property is left on trust for direct descendants, the RNRB will be available only in limited circumstances, for example where they have a right to trust income, or the property is left on particular favoured trusts for children, or on a disabled person’s trust.
    7. The RNRB may also be available if the deceased was a trust beneficiary
      The allowance may be available in certain circumstances where a deceased had a right to use a property held in trust and on his death someone receives the property outright.
    8. The RNRB will be tapered away for estates over £2m
      As a result in 2017/18, an estate over £2.2m will not benefit from the RNRB at all. When the relief reaches £175,000 in 2020/21, the cut-off will apply to estates over £2.35m.
    9. Unused RNRB may be transferred to a surviving spouse or civil partner even if the first to die did not own a residence
      However, where the first death occurs before 6 April 2017, the transferred RNRB is limited to £100,000.
    10. The RNRB may still be available if the individual has downsized.
      Finance Act 2016 legislation extends the availability of the RNRB to those who downsize (or cease to own a home) after on or after 8 July 2015, provided that their direct descendants are left some of their estate outright or on permitted trusts.


The scope of the RNRB is fairly restricted for taxpayers. In particular, it will only be available to those who leave a residence to direct descendants and the application of the taper threshold for estates over £2m will mean that it has limited relevance for some taxpayers.

However, as the government has confirmed that the NRB will be frozen at £325,000 until at least 5 April 2021, it will be important for individuals to take advantage of this new relief where it is available to them.

Such individuals should carry out a careful review of the organisation of their estates and the terms of their wills, especially where a residence is to be left in trust, to ensure that they gain the maximum benefit from the RNRB.

If you would like any more information in relation to this article then please feel free to contact me via email:

+ posts
Back To Top

Powered by How to backup and restore wordpress site

error: Content is protected !!