SCL Wills and Probate, Room 103, Tallis House, 2 Tallis St, Temple, London EC4Y 0AB, Tel: 0203 004 8269

Under David Cameron’s government, the Conservatives had pledge to increase the inheritance tax threshold to £1 million. But rather than a straightforward increase of the current nil rate band from £325,000 to say half a million per person, HMRC seems to have chosen a rather convoluted way of doing this as can be seen in the Finance (No.2) Act 2015. We now have in existence:


  • The Nil Rate Band
  • The Transferable Nil Rate Band
  • The Residence Nil Rate Band (RNRB)
  • The Downsizing Allowance under Finance Bill 2016

The general idea is to provide an additional tax saving on inheritance tax for deaths that occur on or after 6th April 2017 where there is a residence in the deceased estate being left to one or more lineal descendants.

The relief is being brought in tranches by HMRC, as of April 2017 we are allowed an extra £100,000 tax free allowance under RNRB. This figure will increase by £25,000 per year until 2020 when it will hit the total amount of £175,000.

What are the criteria for claiming this relief?


  • There is a taper threshold that is applied before you can claim this relief. This threshold is set at £2 million for the tax years 2017 to 2021 and will increase in line with Consumer Prices Index thereafter. This means that if your estate is over £2million, you will not receive the full relief and the amount available will start to decrease by £1 for every £2 that your estate is over the £2million threshold.
  • This figure of £2million is the gross estate i.e. before any debts or exemptions have been applied and for properties and business owners living in the London area and the Home Counties, this threshold can easily be exceeded.
  • To qualify for the RNRB the estate must include a residential property before death or if there is more than one, the personal representative must choose which property to apply the relief to as it is limited to one property only. However, the deceased must have lived in the property at some stage in their lives and not necessarily be living in that property at the date of death.
  • The category of individuals who must inherit this property or as termed in the act “lineal descendants” is extremely wide. They include: children, grandchildren, and stepchildren adopted children, foster children, children where the deceased was a guardian or special guardian. The class extends further to include the spouse or civil partner of a lineal descendant as at the date of death of the deceased.
  • The Downsizing provision will mean that a deceased’s estate will still benefit the RNRB where; a previous residence was sold on or after 8th July 2015 and a cheaper property was acquired in its place. Or a previous residence was sold on or after 8th July 2015 and no residence was purchased by the deceased between then and the date of his/her death.

It is clear that this is a very complicated piece of legislation that has come into force and as such great care needs to go into the planning of an estate both in wills and moreover, have flexible provisions to adjust potential problems that may occur. Please speak to a wills and probate solicitor whether in London or the Home Counties to ensure that you receive the right advice.

Points to consider:

  • This is not an automatic relief and it has to be claimed by the personal representatives having met all criteria.
  • If the first spouse to die had assets over the £2million threshold then relief that can be applied to the second estate will start to be reduced (tapered).
  • This is very much geared up to married couples/civil partners. As unmarried couple will lose out on the ability to transfer any unused RNRB from the first to die’s RNRB similar to the rules governing the Transferable Nil Rate Band.
  • Siblings or nieces and nephews are not included as the “lineal descendants” and thus cannot claim this relief if they have inherited the deceased’s property.

Clearly, in light of the changes, this is an important time to review your wills to ensure that the provisions still fulfil your wishes and that you have maximised the allowances to benefit to your loved ones.

If you would like further information or a review of your current will please contact us on 0203 004 8269 or and one of our solicitors will be happy to help. We have Office facilities in London Temple , Potters Bar Hertfordshire, Luton and Bedford.

Please note that the above article reflects information only and should not be seen as constituting advice. SCL Wills and Probate will be happy to discuss any of the legal aspects of the RNRB but financial matters will require the advice of a professional, authorised and regulated independent financial adviser.

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