Practical Law includes a definition of the nil rate band for a NRB trust on first death which includes “when computing the maximum amount, my Trustees must take into account my residence nil-rate amount as mentioned in section 8D(4) of the Inheritance Tax Act 1984”

Does this work? The residence nil rate amount is nil if a qualifying residential interest is not inherited by direct descendants. All the nil rate amount is, is a cash gift. Therefore it cannot qualify for the RNRB can it?

I suppose a qualifying residential interest could be appropriated to the NRB trust, and then appointed out to direct descendants, but I do not believe this would increase what goes to the NRB trust.

What do others think? It would be good if it does work.

Simon Northcott

To my mind, it would depend upon how the IHT RNRB relief is allocated in
an estate.

If it attached to the gift of the qualifying property, then the wording
suggested would not seem to work without the property being appropriated
to the NRB trust, which merely serves to complicate matters.

My reading of the situation is that the RNRB merely serves to inflate
the NRB, in the same way as with the TNRB, so that, to the extent it can
validly be claimed, it can be used to enhance an NRB gift. Not sure
this is what the legislature had in mind, though.

Paul Saunders

The Will of a single person, no children, leaves residence to a sibling in IIP trust, and then absolutely to the sibling’s children.

Since the value of the property is aggregated with the estate of the sibling, and it then passes to the sibling’s children, RNRB should be available to the sibling’s estate. Do members agree?

Viju Chhagan
Palmers Solicitors

Yes if the sibling has lived there

Simon Northcott