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The Residence Nil Rate Band – Is Your Will Up To Date?

It was back on 6th April 2017 that an additional inheritance tax relief – the Residence Nil Rate Band – was introduced. The RNRB has reduced inheritance tax for a lot of people, but it isn’t just a case of paying less. There is more to it than that.

The RNRB comes into play when a property is left to someone’s direct descendants. It comes on top of the Nil Rate Band, which currently stands at £325,000. The RNRB adds an extra £100,000 to that sum, and it is set to rise each year in line with the consumer price index. By 2020-2021, it should have reached £175,000.

Any part of the RNRB that is not used can be transferred to the surviving spouse or partner – just like with the NRB. And that may even be the case if your partner died before 6th April 2017, although it is best to get in touch with the experts to find out exactly what your rate band is.

The RNRB will only apply to estates that are valued at under £2million.

What does this mean for your will? If you have already written one, then you will need to make sure that it makes use of the tax saving nature of RNRB. This is especially important if your will contains a trust. The trusts that the RNRB will be available on are a bare trust, a trust for a bereaved minor, an immediate post death interest trust, an 18-25 trust, and a disabled person’s trust.

Although seemingly simple, the RNRB is actually a complex provision, so it is important to speak to an expert if sure you are unsure of any aspect of it.

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