The RNRB is an additional relief available for the estates of people who die and who own their own home which is passed onto their descendants.
The estate is entitled to RNRB if:
- An individual dies on or after the 6th April 2017.
- An individual owns, or shares, a home so that it is included in their estate.
- An individual’s direct descendants inherit the home or a share of the home.
- The value of the estate is less than £2m.
Direct descendants only include:
- A child, grand child or other lineal descendant of the deceased individual
- A spouse or civil partner of a lineal descendant, including their widow/widower or surviving civil partner
- A child who is the deceased individual’s step-child; this is limited to someone whose parents is, or was, the spouse or civil partner of that person.
- A child adopted by the deceased individual
- A child who was fostered at any time by the deceased individual
- A child for whom the deceased individual was appointed as guardian or special guardian when the child was under 18, although they can inherit the home after the age of 18.
If an individual’s home is left to a mixture of direct descendants and other relatives or individuals, the value is apportioned according to the share of the property that the direct descendants inherit.
If an individual has downsized to a less valuable home or has sold or given away their home after the 7th July 2015, the estate will also be entitled to RNRB.
The rates of RNRB increases yearly as follows:
Tax Year Amount of RNRB
2017/18 £100,000
2018/19 £125,000
2019/20 £150,000
2020/21 £175,000
In later years, the RNRB will increase in line with the Consumer Prices Index.
Where an individual dies without using the full RNRB entitlement, RNRB can be transferred to the estate of that individual’s spouse or civil partner, even if the first death occurred before 6th April 2017 and is applied at the rate applicable at the time of the second death. If an estate is valued at more than £2m, the RNRB is gradually withdrawn. For the transfer of the RNRB take effect, the survivor of the couple must inherit from the first to die.
To apply RNRB to an estate, the information and supporting documentation is given to HMRC on the inheritance tax forms, including the transfer of any unused RNRB from the estate of a deceased spouse or civil partner.
If a person makes lifetime gifts to the family, these will not benefit from RNRB as it only applies to an individual’s estate after death.
If an individual gives away the home before death and continues to live in it, that home is treated as belonging to the individual by HMRC and is therefore included in the estate. RNRB may therefore be available for that home if it is given passed to direct descendants.