Residence nil rate band and residue divided between exempt and non-exempt beneficiaries


(benwilliams) #1

I have an estate where husband and wife have both died in the current tax year (18/19). The total value of the estate is £1.2M, of which £1M is the family home. The will of the survivor leaves the residue as to 80% to the children and
20% to charities. There is no specific gift of the house.

Having put this information into HMRC’s online calculator of the additional threshold it is seemingly saying that two full RNRBs (i.e. £250,000) are available whereas I had expected a pro-rata reduction of the two RNRBs in accordance with
the general principle that the RNRB is only intended to benefit direct descendants.

Can anyone confirm exactly how much RNRB is available here and why?

Ben Williams
Grays Solicitors


(Simon James Northcott) #2

All the RNRB will be available to the children as the other part is exempt. If 20% had been left to non exempt non lineal descendants, then there would have been a pro rata calculation with 20% of the RNRB being
lost.

Simon Northcott


(Nigel Scase) #3

Isn’t it more that the full RNRB is available as that part of the estate that passes to the descendants is more than sufficient to frank the RNRB irrespective of where the other 20% goes?
Nigel Scase
Greene & Greene


(Simon James Northcott) #4

Thank you Nigel-that is a better way of putting it!

Simon Northcott


(malcfinney1) #5

As the residue is split 80% in favour of the children then if the RNRB (including any transferable element) is less than or equal to 80% of the value of the home (i.e. the residential interest) the full RNRB is available. The RNRB itself is not apportioned between the 80/20 beneficiaries.

I hesitate to disagree with the latter part of Simon’s post but even if the 20% was left to non-lineal non-exempt descendants the RNRB would not itself be split.

Malcolm Finney


(Simon James Northcott) #6

No need to hesitate Malcolm, we all make mistakes-particularly when answering in haste! Thank you for the correction.

Simon Northcott


(malcfinney1) #7

But you don’t often make them…hence the hesitation !!!

Malcolm Finney