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Residential Nil Rate Band

Here are some information sheets on the Residential Nil Rate Band that various of you have been asking about. It is a very complex piece of legislation that does not do what the government announced they intended to do. It is messy, confusing and I feel will not, in many cases, work at all. It has a direct impact on estate planning and the advice that clients may need so we cannot ignore it.

You will probably wish to know where you stand in regard to some aspects yourself. There is a great deal of information here and it is important that we are all aware of it. It has taken a lot of time to put it all together and I haven’t seen anything else out there in this form. Please do look through it, continue to use it as a resource as necessary, and ask any questions you may have.

Information Sheet 1: Residential Nil Rate Band – The Basic Rules

Here we look at the basic rules and transferability. We also begin to look at how the RNRB is calculated and some of the ways in which it may be capped or even lost. We look at the important date for claiming in regard to downsizing of property and provide a link to some case studies. Also mentioned in this information sheet: Business Property Relief, Agricultural Property Relief, the effect of outstanding mortgages and equity release on property for which RNRB is being claimed. Read more…

Information Sheet 2: Residential Nil Rate Band – How It Is Applied

This section is very much concerned with estate planning. There is a lot of information including how executors actually have flexibility in choosing the property to be used in claiming the RNRB.

Will everyone benefit in the same way? Short answer, ‘No!’. The legislation does not have the effect that many clients may anticipate. For example, the RNRB is available only if the property goes to direct descendants, including grandchildren and remoter descendants. So if your child dies before you and their share goes to their children the RNRB is not lost, right? Not correct; it certainly can be lost and we shall look specifically at how. We shall also see how it may be even further eroded.

We will see that it is not the value of the property that matters but the value of the equity. We shall examine the potential effects of lifetime transfers of property. We also discuss the importance of supporting documentation and explain why the value of the equity in the property and also the value of the estate passing at death to beneficiaries who qualify as direct descendants must both be in excess of the RNRB for the full amount of RNRB to be claimed. There is some vital information here in regard to how it all works. Read more…

Information Sheet 3: Transferability, Downsizing In Detail And Some Practical Considerations

In the previous section we looked at some aspects of estate planning in relation to the RNRB. This section is shorter but still important as we take a look at some practical considerations in relation to aspects where problems are likely to occur, or where confusion is likely to arise. We take another look at transferability of the RNRB, we also look more at the downsizing rules, how the RNRB may be claimed even if there is no property in the estate at second death and the importance of keeping historical information in regard to properties to assist a claim for RNRB. Read more…