<\/p>\n
On 6 April 2017, the RNRB band came into effect. It provides an additional nil-rate band where an individual dies after 6 April 2017, owning a residence which they leave to direct descendants.<\/p>\n
During the 2022\/23 tax year, the maximum RNRB available is currently \u00a3175,000. Just like the standard NRB, any unused RNRB on the first death of a married couple or registered civil partners has the potential to be transferable even if the first death occurred before 6 April 2017. However, the RNRB does come with conditions and so may not be available or available in full to everyone.<\/p>\n
Taxable estate<\/strong> Where an estate is valued at more than \u00a32 million, the RNRB will be progressively reduced by \u00a31 for every \u00a32 that the value of the estate exceeds the threshold. Special provisions apply where an individual has downsized to a lower value property or no longer owns a home when they die.<\/p>\n Lifetime gifts <\/strong> As the \u00a32 million is based on the value of the assets owned at the time of death, it does not include any lifetime gifts made by the deceased, even if they were made within seven years of death and are included in the Inheritance Tax calculation. The amount of RNRB available to be set against an estate will be the lower of the value of the home, or share, that\u2019s inherited by direct descendants and the maximum RNRB available when the individual died.<\/p>\n Deceased spouse<\/strong> A surviving spouse or registered civil partner\u2019s personal representatives may claim any unused RNRB available from the estate of the first spouse or registered civil partner to die.<\/p>\n Residential interest <\/strong> Special guardian <\/strong> Deemed residence<\/strong> The unused RNRB is represented as a percentage of the maximum RNRB that was available on first death \u2013 meaning the amount available against the survivor\u2019s estate will benefit from subsequent increases in the RNRB.<\/p>\n Deed of variation<\/strong> Under the RNRB provisions, direct descendants inherit a home that\u2019s left to them which becomes part of their estate. This could be under the provisions of the deceased\u2019s Will, under the rules of intestacy or by some other legal means as a result of the person\u2019s death \u2013 for example, under a deed of variation.<\/p>\n Main residence<\/strong> The open market value of the property will be used less any liabilities secured against it, such as a mortgage. Where only a share of the home is left to direct descendants, the value and RNRB is apportioned.<\/p>\n Complex area<\/strong> This is a complex area, and HM Revenue & Customs provides only general guidance, with a recommendation that a solicitor or trust specialist should be consulted to discuss whether the RNRB applies.<\/p>\n Downsizing addition<\/strong> The downsizing addition will generally represent the amount of \u2018lost\u2019 RNRB that could have applied if the individual had died when they owned the more valuable property. However, it won\u2019t apply where the value of the replacement home they own when they die is worth more than the maximum available RNRB. It\u2019s also limited by the value of other assets left to direct descendants.<\/p>\n Planning techniques<\/strong> Owning a residence which you leave to direct descendants The introduction of the \u2018residence nil-rate band\u2019 (RNRB) has made it easier for some individuals to pass on the family home. The rise in property prices throughout the UK means that even those with modest assets may exceed the \u00a3325,000 \u2018nil-rate band\u2019 (NRB) for Inheritance Tax.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"_links":{"self":[{"href":"https:\/\/www.broadviewfinancialservices.co.uk\/news\/wp-json\/wp\/v2\/posts\/3785"}],"collection":[{"href":"https:\/\/www.broadviewfinancialservices.co.uk\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.broadviewfinancialservices.co.uk\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.broadviewfinancialservices.co.uk\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.broadviewfinancialservices.co.uk\/news\/wp-json\/wp\/v2\/comments?post=3785"}],"version-history":[{"count":0,"href":"https:\/\/www.broadviewfinancialservices.co.uk\/news\/wp-json\/wp\/v2\/posts\/3785\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.broadviewfinancialservices.co.uk\/news\/wp-json\/wp\/v2\/media?parent=3785"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.broadviewfinancialservices.co.uk\/news\/wp-json\/wp\/v2\/categories?post=3785"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.broadviewfinancialservices.co.uk\/news\/wp-json\/wp\/v2\/tags?post=3785"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nThe RNRB is set against the taxable value of the deceased\u2019s estate \u2013 not just the value of the property. Unlike the existing NRB, it doesn\u2019t apply to transfers made during an individual\u2019s lifetime. For married couples and registered civil partners, any unused RNRB can be claimed by the surviving spouse\u2019s or registered civil partner\u2019s personal representatives to provide a reduction against their taxable estate.<\/p>\n
\nIn determining whether the \u00a32 million threshold is breached, it is necessary to ignore reliefs and exemptions. This means that business relief and agricultural relief are ignored when determining the value of the estate for the RNRB even though they are taken into account to calculate the liability to Inheritance Tax.<\/p>\n
\nWhere the value of the property is lower than the maximum RNRB, the unused allowance can\u2019t be offset against other assets in the estate but can be transferred to a deceased spouse or registered civil partner\u2019s estate when they die, having left a residence to their direct descendants.<\/p>\n
\nThis is subject to the second death occurring on or after 6 April 2017 and the survivor passing a residence they own to their direct descendants. This can be any home they\u2019ve lived in \u2013 there\u2019s no requirement for them to have owned or inherited it from their late spouse or registered civil partner.
\nIn order to pass on a qualifying residential interest and use the Inheritance Tax RNRB, the property needs to be \u2018closely inherited\u2019. This
\nmeans that the property must be passed to direct descendants.<\/p>\n
\nFor these purposes, direct descendants are lineal descendants of the deceased \u2013 children, grandchildren and any remoter descendants together with their spouses or registered civil partners, including their widow, widower or surviving registered civil partner. Also included are a step, adopted or fostered child of the deceased, or a child to which the deceased was appointed as a guardian or a special guardian when the child was under 18.
\nDirect descendant doesn\u2019t include nephews, nieces, siblings and other relatives. If an individual, a married couple or registered civil partners do not have any direct descendants that qualify, they will be unable to use the RNRB.<\/p>\n
\nThe facility to claim unused RNRB applies regardless of when the first death occurred \u2013 if this was before it was introduced, then 100% of a deemed RNRB of \u00a3175,000 can be claimed, unless the value of the first spouse or registered civil partner\u2019s estate exceeded \u00a32 million, and tapering of the RNRB applies.<\/p>\n
\nThe transferable amount is capped at 100% \u2013 claims for unused RNRB from more than one spouse or registered civil partner are possible but in total can\u2019t be more than 100% of the maximum available amount.<\/p>\n
\nThe RNRB applies to a property that\u2019s included in the deceased\u2019s estate and one in which they have lived. It needn\u2019t be their main residence, and no minimum occupation period applies. If an individual has owned more than one home, their personal representatives can elect which one should qualify for RNRB.<\/p>\n
\nA home may already be held in trust when an individual dies or it may be transferred into Trust upon their death. Whether the RNRB will be available in these circumstances will depend on the type of Trust, as this will determine whether the home is included in the deceased\u2019s estate, and also whether direct descendants are treated as inheriting the property.<\/p>\n
\nEstates that don\u2019t qualify for the full amount of RNRB may be entitled to an additional amount of RNRB \u2013 a downsizing addition if the following conditions apply: the deceased disposed of a former home and either downsized to a less valuable home or ceased to own a home on or after 8 July 2015; the former home would have qualified for the RNRB if it had been held until death; and at least some of the estate is inherited by direct descendants.<\/p>\n
\nDifferent planning techniques are available to address a potential Inheritance Tax liability, and these can be incorporated into the financial arrangements of any individual whose estate is likely to exceed the threshold.<\/p>\n","protected":false},"excerpt":{"rendered":"