Residential Nil Rate Band (RNRB)


The Residential Nil Rate Band (RNRB) was introduced in 2015 in addition to the existing nil rate band (NRB) and transferable nil rate band (TNRB) for individuals leaving their main residence to lineal descendants. It is a top up for the existing nil rate band which is currently £325,000.

The RNRB is available where:

  • a person dies on or after 6 April 2017;
  • the person passes away and has surviving lineal descendants, be it biological children, step children, adopted or fostered children.
  • their estate included a qualifying residential interest (QRI) at their death and the QRI was closely inherited. For example, an estate containing one single dwelling house.
  • ‘residence’ is not defined. HMRC have admitted however that it may be considered that a house boat or static caravan is a residence for the purposes of obtaining the RNRB.
  • Unused RNRB can be carried forward to a surviving spouse or civil partner
  • The maximum potential RNRB for each person (before adding brought-forward RNRB) is known as the residential enhancement for the tax year concerned.
  • The RNRB is tapered if the deceased person’s estate exceeds a taper threshold (initially £2 million) at death.
  • The RNRB is capped at the value of the chargeable estate. released guidance about the threshold as follows:

If someone dies on or after 6 April 2017 and their estate is above the basic Inheritance Tax threshold, the estate may be entitled to an additional threshold before any inheritance tax becomes due. The extra amount for 2017 to 2018 is up to £100,000. The maximum available amount will go up yearly.

For deaths in the following tax years it will be:

  • £125,000 in 2018 to 2019
  • £150,000 in 2019 to 2020
  • £175,000 in 2020 to 2021

In order for someone to inherit a residence and take advantage of the RNRB, the following must apply:

They must be a direct descendant:

– a child, grandchild or other lineal descendant

– a husband, wife or civil partner of a lineal descendant (including their widow, widower or surviving civil partner)

This also includes:

– a child who is, or was at any time, their step-child

– their adopted child

– a child who was fostered at any time by them

– a child where they’re appointed as a guardian or special guardian when the child is under 18

If there is more than one property in the estate, the Executors are able to decide which property the RNRB will be used for. In order for this to apply, the deceased must have used the property as a main residence. For example, if the deceased owned a buy-to-let property they would not be able to use the RNRB for this.

Transferrable Residential Nil Rate Band

In the same way that unused NRB can be transferred from the estate of the first spouse to the second spouse, we can transfer RNRB between spouses also.

For example, if a spouse passes away in 2019, leaving a property worth £75,000 to a direct descendant, the Executors, on the death of a surviving spouse will be able to apply to use the remaining RNRB. The threshold for 2019 is £125,000 so this would leave £50,000 unused RNRB to be transferred.

If the surviving spouse, on their death, also leaves a property to direct descendants, the £50,000 of unused RNRB will be able to be applied for and used.

If you want to understand more about Residential Nil Rate Band and how it may be applied in the future to your own estate, why not speak to a member of our Private Client department for more information.