GM Tax

UK IHT Residence Nil Rate Band is on the way

The UK’s Inheritance Tax Residence Nil Rate Band (RNRB) is introduced at the start of the forthcoming UK tax year – ie on the 6th of April, 2017.

The RNRB is an amount of a deceased’s estate that is free of IHT in addition to the standard nil rate band of (currently) £325,000.

An estate will be entitled to the RNRB if:

  • an individual dies on or after the 6th of April, 2017
  • the individual owns a home, or a share of one, so that it’s included in their estate
  • the individual’s direct descendants – such as children or grandchildren – inherit the home, or a share of it
  • the value of the deceased’s estate is not more than £2 million

An estate will also be entitled to the RNRB when an individual has downsized to a less valuable home, or has sold or given away their home after the 7th of July, 2015.

The maximum available amount of the RNRB is to increase each tax year.

For a death in the following tax years the RNRB will be:

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

In  later years the maximum RNRB will increase in line with inflation.

Any unused RNRB when someone dies can be transferred to the deceased’s spouse or civil partner’s estate.

This can also be done if the first of the couple died before the 6th of April, 2017, even though the RNRB wasn’t available at that time.

For estates valued at more than £2 million, the RNRB (and any transferred RNRB) will be reduced by £1 for every £2 that the value of the estate is more than the £2 million threshold.

If you are concerned about UK Inheritance Tax and whether your estate continues to affected – even if you are now living in Australia – please complete the enquiry form on the right of this page.