Inheritance Tax

The Residence Nil Rate Band : Will you benefit from the new rules?

- 

 

The Residence Nil Rate Band was introduced by the Government on 6th April 2017 and reflects the Conservative’s pledge in 2007 to increase the Inheritance Tax Nil Rate Band to £1million for married couples and those in a civil partnership.

THE NIL RATE BAND (NRB)

Inheritance tax is charged at a rate of 40% on the amount over which an individual’s estate exceeds their NRB (currently £325,000 and frozen until tax year 2020/21), after exemptions and reliefs, when they die. The NRB can also be reduced by certain gifts made within 7 years of death.

Any unused NRB of the first spouse or civil partner to die can be claimed on the second spouse’s or civil partner’s death. For example, in a straightforward case of the first spouse or civil partner leaving their estate to the survivor, a combined NRB of £650,000 could be offset against their estate.