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Residence Nil Rate Band (RNRB) – Additional points to remember

The Residence Nil Rate Band (RNRB) comes into force on 6 April 2017. We have written a comprehensive guide available by clicking here, and a summary of important points to note:

What is RNRB?

RNRB is available for deaths on or after 6 April 2017 when a residence or an interest in a property is ‘closely inherited’.

‘Closely inherited’

  • Closely inherited means that it must pass to a lineal descendant or to a spouse of a lineal descendant (including a spouse of a pre-deceased lineal descendant provided that the surviving spouse has not remarried).
  • A lineal descendant includes children, grandchildren, step-children, foster children, children under a special guardianship order and adopted children (and the lineal descendants of all aforementioned).
  • Lineal descendant does not include nieces or nephews or wider family members.
  • Inherited means disposed of by will, under an intestacy or otherwise by survivorship.
  • A deed of variation could be used to vary the position post death to ensure that the RNRB is available as this can be read back for all IHT purposes under s142 of the Inheritance Tax Act 1984.


  • Residence or an interest in a residence left to some settlements will be treated as inherited, these settlements are immediate post-death interest trusts, disabled person’s trusts or bereaved minor trusts. A discretionary trust will not qualify even if all of the potential discretionary beneficiaries are lineal descendants.
  • A relevant property trust will not qualify but it would be possible to make an appointment from the trust within two years and to read this appointment back into the Will for IHT purposes.
  • The appointment mechanism could be used to appoint a residence to a lineal descendant or to create a qualifying immediate post-death interest trust.
  • A residence is a property (‘dwelling’) which has been the residence of the deceased at some time during their period of ownership, it need not be the deceased’s ‘main’ residence nor is there a requirement that they are resident for the whole period of the ownership of the property.
  • The property need not be situated in the UK.
  • A buy-to-let property would not qualify as it will not have ever been the residence of the deceased.
  • A dwelling is any land occupied with its garden and grounds but excludes any woodland which is subject to a deferral election.

RNRB available

  • The enhanced RNRB will be £100,000 for April 2017/18.
  • The RNRB will rise by £25,000 per year until April 2020/21
  • From April 2021 the RNRB will increase in line with the Consumer Price Index
  • The RNRB is capped at the value of the deceased’s residential interest.
  • If there is more than one property then the personal representatives of the deceased must nominate which property the RNRB will apply to.
  • Debt charged on the property are deducted for IHT purposes and will therefore reduce the value of the property. Part of the planning process may involve considering whether it would be appropriate to switch the charges to other assets.

‘Taper threshold’

  • There is a taper threshold (currently £2 million) whereby the RNRB is reduced by £1 for every £2 which exceeds the taper threshold. This threshold will increase in line with the Consumer Price Index from 2021/22. If your estate is likely to exceed this threshold then consider making lifetime gifts to reduce the estate below this threshold.
  • It is advisable to avoid aggregating spouses’ estates so that they exceed the threshold. Consider the use of nil rate band discretionary trusts or passing the estate to others.
  • The value of the estate is the estate immediately before death after the deduction of liabilities but before the deduction of any reliefs or exemptions.
  • Gifts made during the lifetime of the deceased are not included in the value of the estate when considering the taper threshold.

Transferable RNRB

  • When a person dies and they have not used their RNRB then this can be transferred to the surviving spouse.
  • The RNRB can be transferred even if the first to die did not have any property.
  • The transfer of the unused RNRB must be claimed.
  • The RNRB is only available on death and cannot be claimed for lifetime transfers.
  • If a property was given away and the deceased retained a benefit in the property then this gift with a reservation of benefit would form part of the deceased estate and if the gift was to a lineal descendant then the RNRB can be claimed.


  • It may be possible to rely on the downsizing provisions inserted by the Finance Act 2016 if a person has disposed of their property or moved to a less valuable one. The downsizing calculations are complex and advice should be sought and anyone who is downsizing should keep paperwork and records.
  • For downsizing the total chargeable estate passing on death must be greater than the value of any residential property once owned and property must be closely inherited. The downsizing that can be claimed is capped at the value of the closely inherited property.
  • Downsizing cannot be claimed on gift of a residence that creates a reservation of benefit.




For information or guidance, please contact:

Jonathan Shankland
T. 020 7227 7414


This briefing is for guidance purposes only. RadcliffesLeBrasseur LLP accepts no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommends that appropriate legal advice be taken having regard to a client's own particular circumstances.

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