The Residence Nil Rate Band (RNRB) is a relatively new IHT relief introduced in April 2017 to help people pass on some of the value of their home free of Inheritance Tax (IHT).
RNRB can only be claimed in certain circumstances:
• On death
• Where a person has an interest in property which has been used as their home at some point.
• That property interest passes to their direct descendants.
This is a basic summary of the rules, which are quite complex but if the rules are satisfied then up to £175K of the value of the property interest passes free of IHT on death.
If the deceased person was married or in a civil partnership then the RNRB is transferable to their surviving spouse/civil partner. This means that provided the rules are satisfied on the survivor’s death his/her estate will be eligible for an RNRB of up to £350K.
The same does not apply to unmarried couples, who in order to benefit from the RNRB would need to leave their property interest to their direct descendants on their death and not to their partner. This may not be appropriate and could lead to other issues but is something to be aware of and to discuss with the person making your Will.
If you need any advice in relation to making your Will please contact Vicky Bligh 01752 388910.