Posted On / 27.06.2017

The New Inheritance Tax: All You Need To Know

Last year you may have read about the introduction as of 6th April 2017 of a new Inheritance Tax (IHT) allowance called the Residential Nil Rate Band (RNRB). It came with a fan-fare that married couples would have £1 Million that they could leave to their children free from IHT. However to qualify, certain conditions need to be met. Natalie Mason from Battens Solicitors explains:

What do we now know?

  • It is in addition to your existing IHT allowance of £325,000
  • This year is has started at £100,000 and is increasing in £25,000 increments until April 2020 when it will be £175,000
  • It can be claimed if your estate comprises a Qualifying Residential Interest (QRI) which is a property you own and have lived in; and
  • You have left that QRI to your “lineal descendants” who are defined as children, adopted children, step-children and their subsequent issue
  • It can only be set against the value of your QRI not against any other assets in your estate
  • If you are a widow or widower and your spouse died leaving their estate to you, your estate can claim their unused RNRB as well as your own, even if they died prior to its introduction
  • If you subsequently “downsize” your estate could still use the value of the larger property. Keep records, the rules are fiendishly complicated but could be helpful

Be aware! There are some circumstances which can affect your estate’s eligibility:

  • If you are leaving your estate to nieces or nephews – no allowance
  • If you are a Cohabitee you may have a RNRB if you leave your property to your children but you cannot claim your late partner’s unused RNRB
  • If you want your children or grandchildren to inherit when they are older than 18, it will affect the application of the RNRB i.e. your estate might not get the full allowance
  • If your estate is worth more than £2Million your entitlement will be tapered to nil once your estate is worth over £2.2Million
  • If you have a debt against your property the RNRB is set off against the net value of the property. If your spouse has died their estate included a Nil Rate Band Discretionary Trust with a Debt secured against your property it is important to take advice and review your situation.

Do not guess how the rules may or may not apply to you, it is important to get the right advice for your circumstances.  If you would like to discuss this in more detail please contact Natalie Mason on 01929 500323 or

Visit our Tax Planning and Compliance page by clicking here. Visit our Wills and Trusts page here.

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