Inheritance tax and the residence nil rate band

The Conservative election manifesto of 2015 promised that the government would ‘take the family home out of tax for all but the richest by increasing the effective inheritance tax threshold for married couples and civil partners to £1m with a new transferable main residence allowance of £175 000 per person.’

After the election a ‘residence nil rate band’ (RNRB) was introduced to take effect from 6 April 2017 and applies to deaths on or after that date. The RNRB runs alongside and is in addition to the general inheritance tax nil rate band. The band has been phased in over a period of four years and by 2020-21 has reached its full value of £175 000. In this article I will ignore any transitional rules. I will also refer to married couples but the same rules apply...