What is the Residential Nil Rate Band?

One of the main changes to Inheritance Tax legislation since the introduction of the transferable nil rate band in 2007 is the forthcoming introduction of the Residential Nil Rate Band (RNRB) designed to assist parents to leave their main residence to their children.

RNRB will be phased in from April 2017 and the full additional £175,000 for each individual will be available from April 2020. At this time a Husband and Wife’s combined Nil Rate Sums (£325,000 Nil Rate Band (NRB) and £175,000 RNRB) will reach £1 million. Thereafter it will increase in line with the Consumer Price Index (“CPI”).

It will be transferable between spouses and civil partners on death, and will also be available even if a parent has to sell their own home to downsize or to meet residential care costs, provided that an equivalent value of their main residence is passed to a direct descendent.

Sadly it is not a simple process and the increase in the Nil Rate Sum has many complications. The biggest problem is that it is o