The Residence Nil Rate Band (RNRB) came into effect last year for estates where the deceased died on or after 6th April 2017. The good news is that if you leave your main residence to certain beneficiaries, there will be an extra £100,000 of property which you can give away, free of inheritance tax, in addition to the existing nil rate band of £325,000. The relief goes up by a further £25,000 each tax year until 2020 when the total allowance of £175,000 is reached. Add that to the existing nil rate band and your total allowance will be £500,000. Married couples and civil partners can transfer the allowance to each other, entitling them to a maximum allowance of £1m.
So much for the good news! The bad news is that there are some limitations to the new allowance. These include the fact that it can only be claimed if you leave your home to your lineal descendants, such as children or grandchildren. The definition of children includes: step-children, adopted children and foster children, but does not include other relations such as nieces, nephews or cousins.
For any further information concerning Wills, please contact Jenny Mayhew, Director and Head of Wills, Probate & Trusts.