Families failing to take advantage of the RNRB
A Freedom of Information (FoI) Act request has revealed that many UK families are not taking advantage of a recently-introduced Inheritance Tax (IHT) break which could otherwise save them thousands of pounds.
The residence nil rate band (RNRB), which was first introduced in April 2017, enables families and individuals who wish to leave a property to direct lineal descendants in their Wills to pass on an additional £125,000 in property value tax-free.
In England and Wales, each individual is entitled to a standard ‘nil rate band’ of just £325,000 – and all estates valued higher than this will attract IHT at a rate of 40 per cent of their total value.
Due to this, the RNRB is incredibly valuable – particularly as rising property prices and increasing wealth are pushing more and more estates above the £325,000 threshold, which has remained frozen at this figure for more than a decade.
The savings that can be made are potentially huge, as married couples or those in a civil partnership can combine their allowances to effectively pass on up to £1 million tax-free.
However, according to the figures gleaned from the FoI request to HM Treasury, only 5,420 taxpaying estates successfully claimed the RNRB in 2017/18.
This is despite the fact that in an average year, more than 24,000 estates will pay IHT.
In light of the news, families and individuals are being urged to seek specialist legal advice. This can help them to determine their eligibility for the RNRB and to make the appropriate provisions in their Will.