Residence Nil Rate Band (RNRB)
The residence nil rate band (RNRB) is a tax allowance that is available to individuals in the United Kingdom who leave their main residence to their children or grandchildren when they die. The RNRB is intended to help reduce the amount of inheritance tax that is payable on the value of an individual’s main residence.
The RNRB was introduced in 2017 and has been gradually increased over time. As of 2021, the RNRB is worth up to £175,000 per person, or £350,000 for a married couple or civil partnership. This means that if an individual leaves their main residence to their children or grandchildren, up to £175,000 of the value of the property will be exempt from inheritance tax. If a married couple or civil partnership leaves their main residence to their children or grandchildren, the exemption will be worth up to £350,000.
To qualify for the RNRB, the individual must leave their main residence to their children or grandchildren, either directly or through a trust. The RNRB is not available if the property is left to someone other than the individual’s children or grandchildren, or if it is sold or given away during the individual’s lifetime.
The RNRB is subject to a number of conditions and restrictions. For example, the value of the individual’s estate must not exceed the inheritance tax threshold, which is currently £325,000. In addition, the main residence must have been the individual’s main home at some point during their ownership. If the individual owned more than one property, the RNRB will only apply to the property that was their main residence for the longest period of time.
The RNRB is an important tool for helping to reduce the burden of inheritance tax on families who are inheriting a main residence. By taking advantage of the RNRB, individuals can pass on more of the value of their main residence to their children or grandchildren, while still paying a fair amount of inheritance tax on the rest of their estate. It is important to note, however, that the RNRB is just one aspect of the UK’s complex inheritance tax system, and it is advisable to seek professional advice to ensure that you are taking full advantage of all available tax allowances and reliefs.