Additional Residence Allowance

(Inheritance Tax)

The Residence nil rate band

What Is The Residence Nil Rate Band?

The Residence Nil Rate Band (RNRB) is an additional allowance that can be claimed against Inheritance Tax for individuals who leave their main residence to their direct descendants, such as children or grandchildren. Introduced in April 2017, this allowance was designed to help families pass on their homes to future generations free from excessive tax burdens..

At the time of writing, the RNRB stands at a maximum of £175,000 per person, and is not expected to be reviewed until 2028. This allowance is in addition to the standard nil rate band allowance of £325,000, which is the amount that can be inherited tax-free by each individual.

Who Is Eligible To Claim the Residential Nil Rate Band Allowance?

The Residence Nil Rate Band (RNRB) is an allowance designed to help families pass on their homes to future generations free from excessive tax burdens. However, not everyone is eligible to claim this valuable tax relief. In order to claim the RNRB, the property being inherited must have been the deceased's main residence at some point during their life. This means that second homes and buy-to-let properties are not eligible for this allowance. (unless they have been occupied by the owner at some point prior to a death event, in which case the most relevant property may be elected)

Furthermore, the RNRB can only be claimed if the property is being passed on to direct descendants, such as children, grandchildren, stepchildren or foster children. It's worth noting that the definition of direct descendants also includes adopted children and children who were conceived but not yet born at the time of the deceased's death.

The RNRB is a valuable allowance that can help families pass on their main residence to their direct descendants without incurring excessive Inheritance Tax charges. However, this allowance is complicated and has many traps that could result in accidental and expensive loss. It is important to speak to us at ONCE Wills and Trusts who can assist you with you planning.

“Very In-depth, very thorough”

Yinka Odes

Find Out What Type Will You Need To Protect Your Family