Residence Nil Rate Band Planning

The Residence Nil Rate Band (RNRB) will be gradually phased in between 6th April 2017 and 6th April 2020.

In addition to the current Nil Rate Band currently of £325,000, the additional allowance for an individual in the following tax years is illustrated in the table below:


Tax yearNil Rate BandResidence Nil Rate BandTotal for an IndividualTotal for a Married Couple or Civil Partners

In order to benefit from the RNRB, there are some considerations including;

  • The property must have at some point been occupied by the deceased as a residence.
  • The RNRB is limited to the net value of the property after the deduction of any mortgage or charge.
  • The RNRB will be available when the 'qualifying interest' is transferred on death to lineal descendants.
  • In general, the transfer must be outright but transfers into some types of trust are acceptable, however this excludes discretionary will trusts.
  • Special rules will be introduced to protect those who downsize.
  • The deceased's RNRB will be set off against the residence before the standard nil rate band is set off against the balance of the estate, including any value of the residence in excess of the RNRB.
  • The £2 million taper threshold will also increase in line with the CPI from 6 April 2021.
  • Any RNRB that is not used on first death can be transferred to a surviving spouse or civil partner.
  • This is the case regardless of when the first death occurred and whether the deceased could have used their RNRB or not .
  • The amount unused (expressed as a percentage of the amount available) will be applied to uplift the survivor's RNRB entitlement on second death
  • If the first death occurred before 6 April 2017, the deceased's available RNRB is deemed to be £100,000
  • If both deaths occur before 6 April 2017, no RNRB is available.
  • Where the value of the deceased's net estate exceeds £2 million, the RNRB will be reduced by £1 for every £2 above that limit.
  • This means that, in 2020/21, there will be no RNRB available on first death if the net value of the deceased's estate exceeds £2.35 million.
  • This figure will be £2.7 million on the death of a surviving spouse when a full transferable RNRB is available to the executors of the surviving spouse.

The RNRB is a very complex area and so we recommend that you speak to us when considering any Inheritance Tax planning.

Contact Mark Lister and his team today for assistance with Residence Nil Rate Band Planning.