What is the residence nil rate band (RNRB)?
The RNRB is an addition to the basic nil rate band (NRB), which further reduces the inheritance tax payable on death. It differs from the basic NRB in that it is applied only to the death estate, and not to lifetime gifts within seven years of death.
The enhanced allowance is dependent on:
- the value of residential property in the estate, and
- the inheritance of lineal descendants
The RNRB was introduced in Finance Act 2015, with further refinements added by Finance Act 2016. It takes effect from 6 April 2017. The detailed legislation is to be found in amendments to IHTA 1984. Much of the commentary on the provisions has focused on the mind-boggling complexity of the legislation which, to a large extent, is the result of the specific political target of the additional relief. The stated aim of the allowance was to make it easier to pass on the family home to children and grandchildren without the burden of inheritance tax.