Tax Question of the Week Transferrable Residential Nil Rate Band
My client’s husband passed away in 2005 and the whole estate was left to my client, his wife. His unused standard nil rate band was fully transferred to his wife. Will my client also receive an unused residential nil rate band from her late husband or will the fact that he passed away before the residential nil rate band was introduced mean that it is not available?

A. The residential nil rate band (RNRB) is available for deaths on or after 6th April 2017, with the current RNRB being £125,000 for the 2018/19 tax year.

If the RNRB had not been fully used within the estate of the individual who was first to die from a married couple or civil partnership, then the unused part can be transferred to the surviving spouse or civil partner. It does not matter when the first death occurred, as long as the second death is on or after 6th April 2017.

The amount of the RNRB that can be transferred to the surviving spouse is expressed as a percentage which cannot exceed 100% (similar to the standard nil rate band). As the client’s husband passed away before 6 April 2017, there was no RNRB at the time so none could have been used. Therefore, the amount of the transferable RNRB will be 100% of the RNRB in force at the later death of the surviving spouse or civil partner.

If your client passed in 2018/19 and assuming all other conditions for the RNRB are satisfied, she will receive her RNRB of £125,000 and the transferred RNRB of 100% of £125,000. Therefore, she would have a total of £250,000 of RNRB to set against her estate.

One point to be aware of is that the amount of the late husband’s transferrable RNRB will be subject to the tapering provisions. Where the value of his estate after liabilities exceeded £2 million, then the transferrable RNRB is tapered by £1 for every £2 in excess of £2 million. As such, it is possible that the transferrable RNRB can be tapered to nil.

If you have a tax query, why not contact the Tax Advice Line on 0844 892 2470 to discuss it. Our team of experts have a wealth of experience and can also provide a written consultancy service at £180 per hour plus VAT.

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Before joining the team, Vivienne had worked for small boutique tax firms which gave her exposure to a wide variety of tax. She dealt with tax issues mostly for owner-managed businesses and high net worth individuals. Vivienne is a member of the Association of Tax Technicians and is currently in the middle of studying to become a Chartered Tax Advisor.

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