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Inheritance tax and the main residence nil-rate band

23rd January 2017

If you think that your estate is likely to exceed the inheritance tax (IHT) threshold of £325,000, the introduction of the main residence nil-rate band (RNRB) could offer you a way to reduce your estates tax liability. 

Set to come into force for relevant transfers and deaths on from 6 April 2017, the RNRB could mean that all but the largest estates are able to pass on their family home to their direct descendants.

So what do you need to know?  

Outline of the measure 

The RNRB is an additional nil-rate band that applies when a residence is passed to a direct descendent upon the owners death. 

The RNRB will increase yearly from its introduction in 2017 until 2020/21: 

  • 2017/18 - £100,000
  • 2018/19 - £125,000
  • 2019/20 - £150,000
  • 2020/21 - £175,000.

From 2021/22 onwards the RNRB maximum will rise in line with the consumer prices index.


For an estate to be entitled to make use of the RNRB, the following conditions must be met: 

the death occurs on or after 6 April 2017 

the dead individual owned the home or a share of it and it is going to direct descendants 

the value of the estate isn’t over £2 million.

The property in question must be a ‘main residence’. This means a single home that is both included in the deceased’s estate and was lived in by them at some point before their death.

If the individual has downsized to a less valuable property or sold or given away their home after 7 July 2015, they will be eligible for the RNRB. 

If more than one home is owned by the deceased, their personal representatives will be able to nominate which one qualifies.

Transferring any unused RNRB

It will also be possible to transfer any unused RNRB to a surviving spouse or civil partner. The eligibility for this is that the surviving individual dies after 5 April 2017; the death of the first spouse or civil partner can have occurred before the RNRB introduction date.

Planning points 

As always, it is the details of the new measure that open up planning possibilities. The following is a non-exhaustive list of examples of possible RNRB planning points. 

Get in touch with us to discuss your personal situation. 


If a home, or a share of it, is held in a trust, its eligibility for the RNRB will depend on the kind of trust. 

The type of trust affects whether HMRC consider the property to be part of the deceased’s estate for IHT purposes. 


If an estate is worth over £2 million, the RNRB will be reduced by £1 for every £2 that the value of the estate is over £2 million.


There will be an additional amount of RNRB (known as the downsizing addition) for estates that do not qualify for the full amount of RNRB. .

Contact us 

The RNRB represents a complex change to an already intricate area of UK taxation. Effective planning means understanding the details and that is where we come in.

If you would like more information on the technical aspects of this change estate planning, contact us today and speak to a member of our team. 


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